Reliance Infratel and GTL Infrastructure have called off their merger agreement following the expiry of non-binding ‘Term Sheet’ on August 31. The deal was signed on June 27. No specific reason was offered by both concerned parties on why the deal met with failure.

Reliance Communication issued a press release on Monday regarding the future of Reliance Infratel, its tower subsidiary. RCom clarified that the company is in discussion with other strategic and financial investors for drawing up a similar deal to reduce the company’s debt from the passive infrastructure and related assets.

“Owing to the provisions of mutual confidentiality agreements, RCom cannot provide any comment on the reasons for the inability to conclude a transaction with GTL Infrastructure,” said the RCom press release.

GTL Infrastructure issued a statement saying, “Despite efforts, both parties have neither extended the Term Sheet nor entered into any definitive transaction agreements as envisaged therein. Consequently, the process of merger as originally contemplated would not take place.”

Rumors are afloat attributing reasons for the breakdown of the deal – the displeasure of RCom’s minority shareholders on the valuation, concerns on the amount of debt GTL would be forced to incur, etc. Whatever it may be, it is clear that lack of funding is not the reason for the split.

The bulk of RCom’s debt of Rs 32,000 crore was caused by RInfra. RCom was looking forward to clear a substantial portion of its debt through the deal valued at Rs 50,000 crore.

Last September, Reliance Infratel had filed papers for an initial public offering (IPO) that may have amassed up to $ 1 billion. This plan was shelved after the deal with GTL. With the deal falling through, the IPO issue may be revived.

A senior state official from the industry department has confirmed that during the current year, the investments in Tamil Nadu would exceed Rs20,000 crore which is an increase of 66 per cent over the last years investment.

Proposals worth Rs 7,000 crore have poured in especially from automobile companies. Kia Automotive, South Korea’s second largest car maker is one amongst the company who has sent in their proposal. It is said that these investments would help the state government cross the Rs 75,000 crore mark cumulative.

The senior official has commented “We already crossed last year’s investment figure of Rs12,000 crore and by end of the present calendar year we can easily cross Rs 20,000 crore”.

The proposals have mainly come in from automobile companies followed by electronics and heavy engineering. Currently the state already had 10 global auto makers who have invested in the state and right now the focus would be on second rung companies. The officer also confirmed that apart from Kia automotive they have also received proposals from a Japanese second rung automobile manufacturer.

With regards to Kia Automotive who have already initiated talks with the state government, what needs to be noted s that Hyundai Motors already owns 35 per cent stake in the company.  Hyundai Motors already has a manufacturing plant in the state.

Kia Motors plans to set up a manufacturing unit that can produce at least 300,000 vehicles every year and according to experts this would cost them Rs. 4,500  crore as investments.

As on January 2010 TN had signed projects worth Rs. 46,091 crore, 37 projects and this would offer employment opportunities to close to 220,000 people.

The state further went on to accept three more MoUs on August 3 which were worth Rs 13,000 crore which includes MoUs from a LNG based power plant and Indian Oil Corporation. Two more MoUs were signed off on the same day with JK Tyres and Videocon each worth Rs 1,500 crore.

The official also added that currently the state still ahs Rs 800 crore worth projects in hand and Rs 7,000 crore investments in the pipeline that is expected to happen in the next six months.

Yet another development in the automobile sector in India has seen Imperial Motors entering into a JV with an Italian firm Allevard Rejna Autosuspensions. Currently operating in the automotive tubing sector in India, the company has chosen to partner with the Italian firm which is a part of the Sogefi group. Sogefi group is a famous manufacturer of elastic automobile suspension elements.

The new joint venture company, Allevard-IAV Suspensions Pvt. Lt.d is all set to invest Rs 25 crore to set up a plant production facility in Pune and is an 51:49 joint venture.

In a press conference on Thursday, the Managing director of the Sogefi Group, Emanuele Bosica has commented that given the demand present in India for automobiles their main objective is to become one of the leading producers of suspension components in the country.  “This is our second JV in India, the first was with a Bangalore-based company two years ago” he added.

He also claimed that their innovative product would help reduce the car’s weight by 50 per cent. This would be the right arena for them to test these innovative suspension systems with composite content.

“We are carrying out the testing of the prototype in luxury cars in Europe. Once we get the nod from the manufacturer after the trial, we will be aim at mass production of the product by 2012. The overall weight reduction will improve the fuel efficiency and also reduce carbon emission,” said Bosio.

The Chairman of Imperial Auto Industries, Jagjit Singh has confirmed that initially they would start off by manufacturing torsion bar and stabilizer bar for the utility vehicles as well as passenger cars. “These two components form the most critical parts of suspension system,” he said.

Renault, the French car maker is in process of designing and developing a car to meet the requirements of the Indian market which is tentatively set to be introduced post 2013.

Renault India Chief Executive Officer Sudhir Rao at the Society of Indian Automobile Manufacturers (SIAM) summit mentioned “At present, we are at the conceptualization stage for a car which would meet the requirements of the Indian market”. Declining to divulge further details on the can he said “It is too premature to say anything right now, but we are very flexible on that.”

The intention for developing this car is that it would service as their export vehicle to other markets similar to India  “We have a global approach. While the conceptualization and development will be done in India, we and the car will also be exported to markets similar to India,” Rao said.

This car would be an addition to the already announced five models that the company is expected to release by 2013.
Between 2011 and 2013, Renault intends to introduce five cars in India, which will include a small car. The company is expected to share Nissan’s platform in order to launch the car by 2012 thus leveraging on the partnership.

Renault India Country General Manager Marc Nassif told “We have decided to introduce five cars in the two-year period between mid 2011 to mid 2013. It will start with our sedan–Fluence, by next year,” the introduction of SUV Koleos would follow Fluence in the same year.

He also said, “We will introduce the hatchback in the most competitive B segment and it will be rolled out in 2012…We may share a Nissan platform for launching the small car” when quizzed about the small car.

Along with its partner Nissa, Renault is expected to invest close to Rs4,500 crore to build a plant in Chennai that would have a capacity of a maximum of 4 lakh units every year.

Logan was its sedan that was introduced in India in a JV with Mahindra & Mahindra, however the JV came to an end in April 2010. However M&M still continues to manufacture and retail the sedan under a contract manufacturing agreement with the French Car Maker.