Ending months of speculation, Siddharth Shriram group and Honda Motor Co have agreed to part ways from their join venture -- Honda Siel Cars India (HSCI), with the Indian partner selling its entire 3.16 per cent stake to the Japanese partner for Rs 180 crore.
In separate statements, Shriram-led Usha International Ltd and Honda Siel Cars India said UIL and Honda Motor Co (HMC) have signed an agreement to end the JV.
"UIL, which held 3.16 per cent shares in HSCI, had shown an interest in divesting from the joint venture to be able to focus and strategically invest to expand their own core business. Therefore, based on the mutual consent, UIL has sold its shares to the partner Honda Motor Co, Japan," HSCI said.
Following this, HSCI, which was incorporated in December 1995, will now be a 100 per cent Honda subsidiary in India.
"The process of changing the company name and other formalities will be completed over the next few months," the car maker said.
In its statement, UIL said Honda Motor Co has "purchased all of the shares (18,000,000) that Usha held in Honda Siel Cars India Ltd".
The Indian entity further said the stake sale has been negotiated at a price of Rs 100 per share, inclusive of a non-compete fee.
"According to the agreement with HM (Honda Motor), Siddharth Shriram has ceased to be a Director and the Chairman in HSCI," UIL said.
"Usha feels that it was inevitable that some day the parting would come because automobiles are not really Usha's direct business," it added.
While expressing "appreciation" for the support of the Indian partner, HSCI President and CEO Hironori Kanayama said: "We have shared a very successful and fruitful relationship with UIL over the past 17 years."
For Honda, the break up of the JV is the second in as many years in the automobile sector after it had ended a 26-year-old partnership with the Munjals-promoted Hero Group in the erstwhile Hero Honda in December 2010.
UIL has had a relationship with the Japanese auto major since 1985 when Honda Siel Power Products (formerly known as Shriram Honda Power Equipment Ltd) was started. It became the partner of Honda, when it was looking to enter the Indian automotive market.
Of late, it was reported that Shriram was trying to exit the JV and was understood to have asked for a high price, reported to be around Rs 100 per share.
Although it was sensed that Honda had not been willing to give in to the demand of the partner, finally it bought out the stake from UIL at the said rate.