Honda has now become the full owner of its car manufacturing operations in India after it purchased the 3.16% stake held by partner, Usha International Ltd for Rs.180 crores. The Sriram Group promoted company has been in talks with Honda since several months over the valuation of the shares it held in Honda Siel Cars India.
The stake sale by Usha International was expected as it had not participated in a equity increase proposed by Honda. Honda has now purchased Usha International's 1.8 crore shares each valued at Rs.100. The Japanese carmaker has now become the sole owner of HSCI ending its third joint venture in India.
The Honda and Usha International joint venture was started 16 years ago when the Japanese carmaker started building its cars in India. The company slowly increased its stake over the years reducing the Sriram Group promoted company's stake to 3.16%. When it proposed another equity increase, the Indian company refused to join as it felt car manufacturing was not its core business.
The stake sale reported yesterday will mark the end of Siddarth Shriram's tenure as the chairman and director at HSCI. This will also mean a change in brand name. Honda has stated that it will announce a new name for the company in some months.
This is Honda's second major takeover in as many years. Honda had ended its 26 year partnership with two wheeler manufacturer Hero MotoCorp. Honda is running its motorcycle business independently while Hero continues to use Honda's technology under a license.