The Rs 2,500-crore Escorts group is divesting its 50 per cent shareholding in its auto component manufacturing joint venture, Escorts Mahle Ltd, in favour of the foreign partner Mahle GmbH, Germany, for Rs 10.42 crore.
This is part of the Escorts group's strategy to disinvest from its non-core activities, which include businesses such as manufacturing motorcycles, earthmoving equipment and auto components.
Subsequent to the capital restructuring, Escorts Mahle, which manufactures auto components such as piston assemblies, pistons and pins, will become a wholly owned subsidiary of the German company. Escorts Mahle is a 50:50 joint venture between Escorts and Mahle GmbH.
The company has moved the Foreign Investment Promotion Board (FIPB) for seeking government approval to the deal.
However, when contacted, Rajan Nanda, chairman, Escorts group, denied that the group has sold off its stake in Escorts Mahle to the foreign partner.
"We are still negotiating with Mahle for selling off our stake. Talks are still on and we have not sought FIPB nod," Nanda said.
As per Escorts Ltd's annual report for 1999-2000, the company had investments worth Rs 22.50 crore in Escorts Mahle Ltd as on March 31, 2000.
It had 75,00,000 equity shares of Rs 10 each (fully paid) in Escorts Mahle as on March 2000. During 1999-2000, the group had sold preference shares worth Rs 26.25 crore (as on March 31, 1999).
Going by the application filed with the secretariat of industrial assistance (SIA) in the ministry of commerce and industry, the value of Escorts group's investments in Escorts Mahle has dropped by over Rs 12 crore during the course of the last financial year.
The Escorts group had recently sold of its 26 per cent stake in Yamaha Motor Escorts Ltd to Yamaha of Japan for Rs 70 crore.
The promoters are now focusing on four core businesses - agri-machinery, information technology, healthcare and telecommunications. Therefore, the Nandas are shedding their investments in non-core businesses.
Over the last few years, Escorts Ltd has brought down its stakes in Hughes Software Solutions, Escorts JCB Ltd and Hughes Escorts Communications.
It is learnt that getting rid of its entire stake in its earthmoving equipment joint venture with JC Bramford in Escorts JCB is next on the agenda of the group.
Yamaha Motor Escorts renamed
Yamaha of Japan has rechristened Yamaha Motor Escorts Ltd as Yamaha Motor India Ltd after the Nandas of the Escorts group sold of their entire stake to the Japanese partner last month.
The company has appointed M Shibuia, as the new managing director. He will take charge next week.
The company is also in the process of revamping its board. Yamaha of Japan wants to develop India as an export base, sources said.
In Asia, Yamaha Motor India Ltd is the only 100 per cent subsidiary of Yamaha. The Japanese auto major has wholly owned subsidiaries in Europe and Australia.
