India’s biggest hotel conglomerate Indian Hotels Company Limited, famously known as Taj Hotels Resorts and Palaces, made a bid for luxury chain Orient Express Hotels, along with Montezomolo family of the Fiat Group fame. While concentrating on this new venture, they will also look to revive their JV in India, Fiat India Automobiles and will be setting off losses to the tune of Rs 300 crores.
These losses will be set off in the accounts of Fiat India by Rs.175.24 crores in security premium balance and Rs.124.76 of paid up capital. Besides this the new partnership will also consider charging Fiat a certain amount of charges for production of their vehicles which they will be independently marketing in the country. Till date Tata Motors has paid a flat fee for manufacturing cars at the Fiat India Automobile’s Ranjangaon Plant though all marketing and distribution costs were incurred by the joint venture.
Though officials at Fiat India Automobile have not commented on this situation it is learnt that the company has also got an extension to its 2011-12 financial year by 6 months so as to start off anew with a six month fiscal year from October 2012 to March 2013. Extension of company dealerships is in the offing while the extension will add to their balance sheet and help in reducing losses.