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Escorts to sell 24% to Yamaha in subsidiary

The Nandas-owned Escorts Limited has decided to shed 24 per cent stake and management control in Escorts Yamaha Motors Limited, or EYML in favour of the Japanese partner Yamaha Motor Corporation for Rs 2 billion, hiking Yamaha's stake in the venture to 74 per cent.

Escorts will, however, retain the remaining 26 per cent shareholding in the motorcycle manufacturing venture, company sources said.

An agreement to this effect will be signed between both the partners next week. ''The existing board of directors of the company will resign and a new board with greater participation from Yamaha would be appointed,'' the sources added.

These decisions were taken at a board meeting held on April 15.

Escorts Yamaha was floated as a 50-50 joint venture to produce motorcycles. With this equity restructuring, Yamaha will control 74 per cent stake in the venture while escorts' stake would be reduced to 26 per cent.

The divestment, the sources said, will generate value for Escorts to put into other businesses and reduce its interest burden.

UNI

Business