Escorts Yamaha Promoters To Offload 48% To Public

Ecorts Yamaha Motor Ltd, the 50:50 two-wheelers joint venture between Escorts Ltd and Yamaha Motor Company of Japan, is finalising a 48 per cent domestic public offer for next year. The two partners will retain 26 per cent each in the company after the issue.

The company is working out the issue premium and expects to mop up Rs 500 crore, including the premia, from the proposed public offer. The issue is likely to offer around 20 crore shares.

This was disclosed by Escorts Yamaha marketing director K Minami, a Yamaha nominee on the board. However, Minami clarified that the company had no intention of tapping overseas capital markets for funds.

Escorts Yamaha has drawn up plans to invest about Rs 530 crore by the year 2001, of which Rs 170 crore was invested between October 1996 and March 31, 1997.

Once all the investments are in place, the companys production capacity for two-wheelers will double from the current 250,000 to 500,000 by 2003-4.

The company is targeting a turnover of Rs 2,000 crore in five years, and has planned the launch of one new model or variant in the country each year as its strategy to face competition.

Escorts Yamaha has already announced plans to enter the four-stroke motorcycle segment in the country in 1998. A foray into the domestic scooter market is scheduled for 2001-2.

In October 1996, Escorts had signed seven agreements with Yamaha Motors for an expansion plan with an investment of about Rs 525 crore, introduction of new vehicles and installation of a new scooter plant in Gurgaon under Escorts Yamaha Motor Ltd.

Profit-sharing plan for directors

Escorts Yamaha is drawing up a new compensation package for its six whole-time directors, which envisages a cut in the net payout, but includes a profit-sharing clause.

The company board will discuss the new package soon. Escorts Yamaha has a 15-member board, of which three are eminent directors. Both

Escorts and Yamaha have nominated three full-time and three part-time directors each on the board.

Said a senior company executive: The linking of the fortunes of a director to that of the company will ensure a focused and dedicated involvement of the company director in the affairs of the company.