Honda Motor Company has parted ways with Usha International Ltd, thus ending its 16-year joint venture in India. Honda bought out UIL’s 3.16 percent stake in Honda Siel Cars India for Rs 180crore.
Commenting on the agreement, UIL said “it was inevitable that someday the parting would come because automobiles are not really USHA’s direct business.”
Honda and UIL had been discussing future business expansion plans and their own priorities. UIL itself had shown an interest in divesting from the joint venture to be able to focus and strategically invest to expand its own core business.
UIL further commented that “the proceeds from the stake sale would be applied to the normal development of its business.
Commenting on the development, Hironori Kanayama, president and CEO, HSCI, said, “We have shared a very successful and fruitful relationship with UIL over the years. I would like to take this opportunity to express my appreciation for Siddharth Shriram’s contributions to HSCI and wish UIL a bright future.”
UIL has had a relationship with Honda Motor Company since 1985 when Honda Siel Power Products was formed. When Honda Motor Company was considering manufacturing cars in India, they found a suitable partner in UIL to kickstart its automotive business in India. And to help the Japanese firm develop its Indian business, UIL had provided some of its best people to the JV.
Following the sale, UIL owner, Siddharth Shriram will cease to be the chairman and director of HSCI.
HSCI will now be a 100% Honda subsidiary in India. The process of changing the company name and other formalities will be completed over the next few months.
Issue: 166 | June 2013
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