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Yamaha to move FIPB

Yamaha Motor Company, or YMC, of Japan will approach the Foreign Investment Promotion Board, or FIPB, tomorrow to seek permission for infusion of fresh Rs 2 billion equity in Escorts Yamaha Motor Limited, or EYML, to hike its stake in the venture from 50 per cent to 74 per cent.

With the board of directors of Escorts Limited today giving its go-ahead for the sell-off, Yamaha will be filing its application with the FIPB tomorrow, senior company officials said in New Delhi.

As per the application, Escorts Limited will sell 24 per cent stake in EYML to Yamaha by May-June this year. The agreement also includes a clause whereby Escorts will have the first right of refusal if Yamaha decides to offload the stake in future, the official added.

''The entire transaction is likely to be completed by May-end or beginning of June this year,'' the official said.

Following the decision, the current board of directors of EYML is likely resign and a new board would be constituted with greater participation from YMC.

''All these decisions would be taken at a follow-up board meeting to be held in Japan shortly,'' the official said, adding that no date has been finalised for the meeting.

Meanwhile, Escorts Limited today announced that its board of directors has agreed to divest 24 per cent stake in EYML to Yamaha.

Currently, both the partners hold 50 per cent stake each in the venture.

Rajan Nanda, chairman of Escorts Group, said: ''We have always believed that business relationships are driven by the value added by each partner. It is based on this philosophy that the partners have decided it would be appropriate for YMC, as a technology provider, to take the lead role in the business.''

Nanda said that the company would have the additional benefit of enlarging its scale of operations for manufacturing and supplying products worldwide.

On its part, Escorts will continue to provide a stronger base for manufacturing facilities, countrywide dealership network and skilled manpower.

UNI

Business