August 11, 2012 12:45:43 am
Japanese auto major Honda Motor will now hold a 100 per cent stake in its Indian arm Honda Siel Cars India (HSCI) after the Siddharth Shriram-led Usha International (UIL),the Indian joint venture partner,decided to exit the company selling its 3.16 per cent stake for Rs 180 crore to the Japanese firm.
HSCI,which manufactures cars like the City,Civic,Accord and Jazz in India,will now become a wholly-owned subsidiary of Honda. The process of changing the company name and other formalities will be completed over the next few months,Honda said in a statement on Friday.
This is the second break-up of the Japanese major with its Indian partner in the last two years. In 2010,it ended its 26-year-old partnership with the Hero Group (Hero Honda Motors) and housed its two-wheeler business in Honda Motorcycle and Scooter India. Now it has gained complete control over HSCI,the entity responsible for its car business in India. Honda has already created a wholly-owned subsidiary in India called Honda Motors India,which may house the car business of HSCI,sources said.
The exit of UIL from Honda Siel Cars has also ended a 17-year partnership between the two firms after Honda agreed to pay Siel a premium for the non-compete clause.
Siel had in 1995 entered into a 40:60 joint venture with Honda Motor of Japan. However,a couple of years later,due to a funds crunch,it had let Honda up its stake to 98 per cent.
Around 2010,Siel bought back another 3 per cent stake,taking its stake to 5per cent.
Earlier this year a rights issue to fund the companys expansion plan had driven a wedge between the two and Siels ownership share again fell to 3.16 per cent as it kept abstaining from subscribing to the rights issue.
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