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Strategies & Market Trends : India Coffee House -- Ignore unavailable to you. Want to Upgrade?

To: Mohan Marette who wrote (6464)	9/7/1999 10:14:00 PM
From: Mohan Marette	Read Replies (1) \| Respond to of 12475

Honda Siel to invest Rs 8.5 billion (US$188 mil) in five years hondacarindia.com Wednesday, September 8, 1999 Our Corporate Bureau in Mumbai(bs) Honda Siel Cars India will invest Rs 850 crore more in the venture over the next five years. The proposed investment is for further indigenisation of manufacturing facilities beyond the present 70 per cent as well as for development of new models, company chairman Teruo Fujisaki said. The venture might also see the Shriram group buying back 15 per cent equity stake in it by October 2000. Honda Siel general manager A M Gupta said an agreement has been entered into whereby the Shriram group can buy back 15 per cent equity for Rs 54 crore to take its stake to 20 per cent by October 2000. Fujisaki said Honda expects to commission by the beginning of 2001 its proposed two-wheeler manufacturing plant at a location near New Delhi at a cost of Rs 150 crore, through a wholly-owned subsidiary. For the first five years after incorporation of the new wholly owned subsidiary, only scooters would be manufactured and thereafter, motorcycle models would also be produced, Fujisaki said. There would be no clash of interest with the joint venture Hero Honda, as motorcycle models would be segregated between the joint venture and the 100 per cent subsidiary, Fujisaki said, after inaugurating a 50,000 sq ft Honda car showroom cum service centre set up by Ichibaan Honda. "We want both the hero Honda and the proposed new company to grow," he stressed. Honda and Hero group have 26 per cent each equity stake in Hero Honda and the balance is held by the public. Asked for the reasons behind going in for a 100 per cent subsidiary for 2-wheelers when it already has a joint venture in the sector, Fujisaki said India has a big potential market for two-wheelers and Honda wanted to be engaged in both production and marketing. On its application seeking nod for import of its much-acclaimed car in the us Accord, he said the new government taking office after the parliamentary polls may give policy nod. Fujisaki said Honda Siel had no plans for introduction of new models and instead, concentrate on sales and service of luxury car City. Gupta said changes in city model, carried in other Asian countries, would be introduced in India in due course. Fujisaki said Honda Siel has set a sales target of 11,000 units for 1999-2000 against actual sales of 9,631 units in 1998-99. Gupta said Honda was not considering manufacturing Accord in India as it was unsure of the market size for such a model falling between the luxury car segment and the expensive models like Mercedes. Fujisaki was, however, confident that the government would not allow free import of cars as it would have a debilitating effect on huge investments made by car makers in putting up manufacturing facilities in India.