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Pallonji to sell 49% in United Motors

V Phani Kumar & Reeba Zachariah

The Shapoorji Pallonji group, which owns 98 per cent in the Rs 2-billion United Motors, one of Telco's largest distributors, has decided to offload a 49 per cent stake.

Senior officials at the Shapoorji Pallonji group said: "We are looking for a strategic partner in United Motors because we have been making losses. The automobile industry, including Telco, is going through a rough patch, and this has adversely affected business."

"However, we are not exiting United Motors. We are diluting part of our stake," they added. The company has accumulated a loss of Rs 200 million since 1998. It is also looking at pruning its workforce of 400 employees. Regarding this, it was in negotiations with the employees' union, sources said.

In 2000, the Shapoorji Pallonji group had made an open offer at Rs 140 per share and delisted United Motors from the bourses.

Telco, the Tata group's automobile flagship, made losses of Rs 4.99 billion last year because the sale of mainline trucks plummeted.

United Motors is also a property developer. It earns a royalty of 7.5 per cent on the sale of non-branded products and 15 per cent on branded products from Trent's Westside store in Mumbai. The company has outlets in Mumbai, Thane, Vashi and Ratnagiri on owned and leased premises.

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