Kotak, Ford Credit part ways

The Kotak Mahindra Group today announced that it would buy out Ford Credit International's 40 per cent stake in Kotak Mahindra Primus Ltd.

In a related realignment of the shareholding structure, FCI will increase its 55 per cent stake in Ford Credit Kotak Mahindra Ltd (FCKM) to 100 per cent.

FCI will acquire the shares from the Kotak Group (35 per cent) and Mahindra and Mahindra (10 per cent). The transactions are subject to regulatory approvals including those from the Foreign Investment Promotion Board and the Reserve Bank of India, according a to a Kotak press release.

Kotak vice chairman and managing director Uday Kotak said the bank would continue to build its car finance franchise and maintain its position as a significant player in the segment.

The proposed realignment of shareholding will terminate the nine-year old joint venture between the Kotak Mahindra Group and Ford Credit International. Kotak Mahindra Primus will drop 'Primus' from its name and FCKM will drop Kotak Mahindra from its name.

Dipak Gupta, executive director of Kotak, said it would be business as usual. However, Kotak would not be able to finance Ford cars for one year from the date of the change in shareholding structure. Similarly, FCKM would not be able to finance any other car but the Ford for an equal period of one year.

The new structure is consistent with Ford's global strategy to focus on supporting Ford Motor Company products and Ford dealers. In India, Ford Credit International would remain committed to that objective, Mike Kozel, president of Ford Credit's Asia-Pacific Region, said.

Kotak Primus finances non-Ford passenger cars and FCKM finances Ford passenger cars.