Chennai: Hyundai Motor India Ltd (HMIL), the wholly-owned subsidiary of Hyundai Motor Company (HMC), Korea, has decided to put off its proposed initial public offering (IPO). In February 2002, the company had initiated discussions with merchant bankers for a possible IPO, expected to be put through late this year or early next year.

HMILs proposed IPO was to have been done through a divestment of the shares held in the Indian subsidiary by the Korean parent and could have been preceded by a private placement of shares in favour of financial institutions. The total divestment was to have been in the region of about 24 to 26 per cent of the total equity invested by the Korean parent.

This is the second time that the Indian subsidiary has postponed IPO plans. But the reasons are different. The first time around in 1999, the Korean automobile major deferred a proposal to offload 14.2-per cent equity in its wholly-owned Indian subsidiary for at least two years.

HMC had then said that it will wait until HMIL became profitable and built a respectable brand to come out with an IPO. Hyundai has also got the nod of the Foreign Investment Promotion Board to shelve the divestment proposal.

But, now, with the IPO being postponed without any definite plans in the near future, the company is tying up funds from other sources for financing its expansion plans. On 26 June 2002, HMIL had announced a $300-million (Rs 1,500 crore) capacity expansion plan. The expansion is aimed at helping HMIL increase its portfolio of offerings in India and making it a global export hub for small cars.