MUMBAI, July 29: The Foreign Investment Promotion Board (FIPB) is yet to clear US-based Cummins' application for increasing its stake to a majority 51 per cent in Kirloskar Cummins, a 50:26 venture with the Kirloskars.

The two partners, Cummins and Kirloskars, had in March announced that they would part ways, and Cummins would buy 1 per cent of the company's stake from the Kirloskars. The Pune-based Kirloskars had held 25.5 per cent in Kirloskar Cummins, which is to be renamed Cummins India, through Kirloskar Oil Engines.

Kirloskar Cummins, when contacted, confirmed that the clearance from the FIPB had not come as yet. However, company officials refused to say whether FIPB had rejected the proposal.

The company, through an extraordinary general meeting on May 6 this year, had taken approval from shareholders for the transfer of 1 per cent stake to Cummins and also for the new name of the company.

Consequently, the five representatives of the Kirloskar group on the Kirloskar Cummins board were to step down after the change in shareholding pattern.

As a result of the delay, the Kirloskar representatives, Sanjay Kirloskar, Vijay Kirloskar, Vikram Kirloskar, CA Phalnikar and YV Malse will continue as directors of the company.

With the annual general meeting of Kirloskar Cummins coming up on August 12, three of the five directors -- Sanjay Kirloskar, Vikram Kirloskar and Phalnikar -- who were due for retirement by rotation would be eligible for re-appointment.

The Kirloskars' plan is to offload their entire holding in Kirloskar Cummins. They have already divested 4 per cent of their stake to foreign institutional investors.Kirloskar Oil Engines corporate vice-president and company secretary CR Chandratre, when contacted, said: "We will offload our stake in the company, but are yet to finalise how to go about it".Kirloskar Oil Engines produced a record 10,000-plus engines during the financial year.

During the year, it introduced a new engine model in the compressor market, which has achieved reasonable acceptance.The company recorded a turnover of Rs 811 crore in 1996-97 compared with Rs 670 crore in the previous year. Net profit increased from Rs 63 crore to Rs 78 crore.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.