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Siel Looking To Sell Its Stake In Honda
Honda's car sales in India have not been exceptional; in the past two years. Its sales fell even when India saw car sales increase by 29% in 2010. Sales continued to fall dramatically in 2011 due to Honda not responding to demand for diesel cars.
Honda is now planning to raise as much as Rs.3,000 crores to develop new cars and design new diesel engines. But the Siddharth Sriram owned SIEL is reluctant to raise so much money. If SIEL has to retain its5% stake in Honda Siel, it must match the investment proportional to its stake.
SIEL is now considering to sell its stake to Honda rather than investing money in to Honda SIL. The company is valueing its stakei Honda Siel. Reports say Honda is reluctant to pay the value quoted by SIEL for the 5% stake in the company.
Honda Siel Cars India has not made any comments on the discussions between Honda and SIEL on the stake sale. If honda agrees to buy out Siel's stake, it will result in another joint venture between a Japanese carmaker and an Indian company ending.
Honda had ended its joint venture of 26 years with Hero Honda early last year. It had also ended its partnership with scooter manufacturer Kinetic when it sold its entire stake in Kinetic Honda. Honda is operating its gen set business independently. Honda has a minority partner only in the car business and if Siel does walk out of the joint venture by selling its stake in Honda Siel, Honda will be a solo manufacturer for the first time in India.
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