Kirloskar Oil is seeking shareholder approval for the joint venture at its forthcoming annual general meeting (AGM). Kirloskar Oil will hold 26 per cent with Denso having the rest. Although Kirloskar Oil's 26 per cent stake will amount to an investment of Rs 8.52 crore, it is seeking approval for an investment of Rs 10 crore. This is being done to aid any escalation in the project cost and the consequential increase in equity.

The joint venture will issue capital in three stages. In the first stage, Kirloskar Oil will purchase 39 lakh equity shares, ofthe total number of 1.49 crore shares, while Denso will purchase the balance. In the second stage, Denso Corporation will be allotted 2.05 crore shares of Rs 10 each at par. Kirloskar Oil will not subscribe to the share capital. In the third stage, Kirloskar Oil will purchase, from Denso, 53.30 lakh shares of Rs 10 each at par. This will result in Kirloskar Oil and its associate companies holding 26 per cent in the joint venture.

Kirloskar Oil's staggered investment is being done on a need basis, as and when business plans determine the need for funds. For Kirloskar Oil to raise the entire requirement will involve a cost, hence this phased move, officials said.

The joint venture company, which has bought 15.22 acres of land at Visweswarapura, near Bangalore, is expected to be operational by next year.

Denso Kirloskar Industries Pvt Ltd is the third joint venture following the setting up of the Kirloskar-Toyota Motor Corp -- joint venture for the manufacture of multi-purpose vehicles at Bidadi, nearBangalore. The two others are with Toyoda Gosei Co Ltd for the manufacture of plastic parts and with Toyota Tsusho Corp (TTC), for steel centre and logistics. While Kirloskar Systems will hold a 26 per cent stake in the joint venture with Toyoda Gosei, its stake in the TTC is expected to be nominal.

Kirloskar Oil is also seeking shareholder approval to demat its shares and enter into a contract with the National Securities Depository Ltd (NSDL).

During 1997-98, Kirloskar Oil earned a total income of Rs 819 crore (Rs 689 crore), of which Rs 631 crore (Rs 615 crore) was from operations. Its `other income' rose sharply to Rs 179 crore (Rs 66 crore). During 1996-97, too, its other income made a significant contribution, through sale of stake in the erstwhile Kirloskar Cummins India Ltd. Kirlsokar Oil's stake in Cummins' is now at about 12 per cent. The company has declared a dividend of 35 per cent.