Shriram keen to buy back Honda SIEL stake

SIEL, which held 40 per cent Honda SIEL Cars and 33 per cent in Honda SIEL Power, sold 30 per cent in Cars and entire stake in Power Products to Honda with an option to buy back in the next two years to part-finance the company’s ongoing expansion plans.

As per the agreement, SIEL could buy back 30 per cent (Rs 54 crore) in Cars and 10 per cent (about Rs 26 crore) in Power Products at the same price at which it was sold toHonda.

However, SIEL’s option to buy back in Honda SIEL Cars was reduced to 15 per cent after the company’s paid up capital was doubled to Rs 360 crore last year. Shriram said SIEL would not invest anywhere other than to buy back its stake in joint ventures with Honda.

He said it makes good business sense to buy back stake in Honda SIEL Cars as automobile business was at its bottom today and it cannot go lower than this. "In the next five years sales would go up to seven to eight lakh cars," he added.

He said option to buy back the stake was given to SIEL at the generosity of Honda. SIEL is embarking on a major restructuring by hiving off operating divisions into separate companies to give greater focus and improve bottom line.

Sale of assets in Delhi, which is likely to be completed by September end this year, alone would fetch around Rs 100 crore to the company, Shriram said. SIEL is also scouting for a foreign partner for its airconditioner division SIEL Aircon. Shriram said SIEL would shortlybecome a minority shareholder in the venture.