Usha sells stake in Honda Siel to Japanese partner

Usha international, part of the Shriram Group, the Indian partner in the Honda-Siel joint venture has just announced that it has sold its entire stake in the enterprise to its Japanese partner, Honda Motor Company. The Shriram Group has had a long relationship with Honda since they introduced the Japanese company’s power products (such as generator sets) in India way back in 1985. And since 1995, the two companies have worked together to make and sell Honda’s cars in the country.

Usha International Limited (UIL) played a major role in Honda setting up shop in India and the first car that came out of the joint venture, christened Honda Siel Cars India (HSCI), was the original Honda City, introduced to Indian car buyers in 1996. Since then, the JV has rolled out two more generations of the City, along with a slew of other internationally successful Honda cars such as the Civic, CR-V, Jazz and the latest one of the lot just last year, the Brio.

As part of the disinvestment deal, Honda Motor Company, Japan, purchased the entire 3.18 percent stake (some 180,000,000 shares) UIL held in the venture for a total of Rs 180 crore. Following this sale, now HSCI is a 100 percent subsidiary of Honda in India. According to the statement released to the press, UIL announced that it had shown an interest in divesting from the joint venture to be able to focus and strategically invest to expand its own core business and that the decision was based on mutual consent.

Commenting on the development, Mr. Hironori Kanayama, President & CEO, HSCI, said, “We have shared a very successful and fruitful relationship with UIL over the past 17 years. I would like to take this opportunity to express my appreciation for Mr. Siddharth Shriram’s contributions to HSCI and wish UIL a bright future.” As for the future, Honda seems set in its plans for the Indian market, and the split should not affect the Japanese auto giant’s customers in the country in any way. As for what this means in the long term, only time will tell.