Companies & Sectors
Siddharth Shriram Group exits Honda Siel; sells stake in for Rs180 crore

HSCI, which was incorporated in December 1995, will now be a 100% Honda subsidiary in India


New Delhi: Ending months of speculation, the Siddharth Shriram Group and Honda Motor have agreed to part ways from their join venture—Honda Siel Cars India (HSCI)—with the Indian partner selling its entire 3.16% stake to the Japanese partner for Rs180 crore, reports PTI.
 
In separate statements, Shriram-led Usha International and Honda Siel Cars India said UIL (Usha International) and Honda Motor (HMC) have signed an agreement to end the joint venture.
 
“UIL, which held 3.16% 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 Company, Japan,” HSCI said.
 
Following this, HSCI, which was incorporated in December 1995, 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,” the car maker said.
 
In its statement, UIL said Honda Motor has “purchased all of the shares (Rs18 crore) that Usha held in Honda Siel Cars India”.
 
The Indian entity further said the stake sale has been negotiated at a price of Rs100 per share, inclusive of a non-compete fee.
 
“According to the agreement with 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 chief executive officer 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 joint venture 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) 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 joint venture and was understood to have asked for a high price, reported to be around Rs100 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.
 
Siel had bought HSCI shares from Honda in September last year at a price of Rs52.80 a piece to increase its stake to 5% from 2.6% earlier.
 
In March 2012, Honda had subscribed to a rights issue of HSCI at Rs57.1 per share, in which Siel did not participate. Following this, Siel’s stake in HSCI came down to 3.16%.
 
Earlier, HSCI was planning to raise Rs3,200 crore to fund its expansion. Of this, Rs1,200 crore was mopped up through the rights issue.
 
HSCI, which makes models like City, Jazz, Brio, Civic and Accord, had partially inaugurated its second manufacturing facility at Tapukara in Rajasthan in September 2008.
 
The company had committed an investment of Rs1,000 crore to set up the facility at Tapukara with an installed capacity 60,000 units per annum.
 
In 2010, it had announced a further investment of Rs250 crore at the plant to expand the power train unit, mainly to cater to its small car Brio.
 
It currently rolls out engine and transmission components such as cylinder heads and cylinder blocks.
 
Earlier in 2010, HSCI had stated that it was likely to start car assembly operations at Tapukara from 2012. However, last year it had said the plant is expected to start rolling out vehicles within the next two-three years.
 
The company’s first facility at Greater Noida, set up for Rs450 crore in 1997, has an installed production capacity of one lakh units per annum and can produce up to 1.2 lakh units by improving the efficiencies of different verticals. 

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Replace “no-frills” account with savings bank account: RBI to banks

While there will be no limit on the number of deposits that can be made in a month, basic savings bank account holders will be allowed a maximum of four withdrawals in a month, including through ATMs


Mumbai: The Reserve Bank of India (RBI) on Friday asked banks to drop the “no-frills” tag from the basic saving accounts as the nomenclature has become a stigma, reports PTI.
 
It has asked the banks to provide zero balance facility in the basic banking accounts along with ATM-cum-debit cards without any extra charge.
 
“With a view to doing away with the stigma associated with the nomenclature “no-frills” account and making the basic banking facilities available in a more uniform manner across banking system, it has been decided to modify the guidelines on opening of basic banking “no-frills” accounts,” RBI said in a circular to the scheduled commercial banks.
 
The central bank had introduced “no-frills” accounts in 2005 to provide basic banking facilities to the poor and promote financial inclusion. The accounts could be maintained without or with very low minimum balance.
 
RBI has asked the banks to convert the existing “no-frills” accounts into “basic savings bank deposit accounts” (SB).
 
While there will be no limit on the number of deposits that can be made in a month, basic savings bank deposit account holders will be allowed a maximum of four withdrawals in a month, including through ATMs.
 
“This account shall not have the requirement of any minimum balance... Further, no charge will be levied for non-operation/activation of in-operative basic savings bank deposit account,” RBI said.
 
As per the modified guidelines, the services available in these accounts will include receipt of money through electronic payment channels or by cheques issued by government agencies.
 
This would also help those covered under the welfare schemes like the Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA) in receiving payments.

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Ratan Tata seeks employees’ co-operation to take on M&M challenge

At the end of the June quarter, the market share of Tata Motors in the car segment stood under 10%


Mumbai: Tata Group chairman Ratan Tata yesterday said he has “great respect” for the Mahindras but is also ‘saddened’ and ‘shamed’ that Mahindra & Mahindra (M&M) has overtaken Tata Motors in the market sweepstakes, reports PTI.
 
“I have a great respect for what Mahindra & Mahindra has been able to do. I also have a certain degree of sadness and shame that we have let that happen here,” Mr Tata told the 67th annual general meeting (AGM) of the country’s largest auto company last evening.
 
Incidentally, this was Mr Tata’s last AGM as the chairman of Tata Motors, as he is slated to retire as chairman from the $100 billion Tata Group in December.
 
At the end of the June quarter, the market share of Tata Motors in the car segment stood under 10%. The company, however, is the largest commercial vehicle maker with over 65% market share in the first quarter.
 
Calling for introspection, Mr Tata said the company will do everything to win back leadership position in car segment.
 
“I think we have a great deal of introspection to do, as to why M&M should be ahead of us and us catching up, on the horse-power we have lacked it, but we should have been there and not them.
 
“So I hope the spirit of this company will ensure that we undertake every step to get back to the prominent position and not let a competitor do better than us, by being first in everything we do,” Mr Tata said.
 
Tata Motors, which is the largest auto company in India, apart from being the fourth largest commercial vehicle maker in the world, will have to “single-mindedly” retain and protect its market position across all segments, he said.
 
“Tata Motors will have to understand customers better and will have to pay attention to the product offerings as well as customer support... will have to sustain and retain the market share. Failure to do so will see us slipping,” Mr Tata said, adding that “I hope the employees will rise to the occasion in spirit to meet the needs of the changing times.”
 
Promising shareholders that Tata Motors will take all efforts to improve its fortunes in the domestic market, Mr Tata said “We will undertake steps to get back to leadership position. Already we support our products after 10 years after the date of purchase”.
 
Stating that steps are already underway to arrest the slide, he said that Tata Motors is introducing very competitive range of commercial vehicles, which can compete ‘admirably’ with international CV makers like Merc, Volvo, and the Mahindra Navistar.
 
Mr Tata said that Tata Motors, which is the world’s fifth largest CV maker, will have to “single-mindedly” retain and protect its market position across all segments and any failure to do so will see them slipping.
 
Seeking employees’ support, he said: “I hope the employees will rise to the occasion in spirit to meet the needs of changing times.”
 
On fuels, Mr Tata said diesel has really become the fuel of the future. “Both in terms of fuel economy, torque diesel is today good. In fact, diesel is going to really become the engine of the future, so everyone is working on diesel.”

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