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Auto components-maker Hero Motors on Monday said it has sold a 17.6 per cent stake in Munjal Kiriu Industries, a joint venture with Japan's Kiriu Corp, to the co-promoter, thus becoming a minority shareholder.
"The parent companies changed its capital structure - HML (Hero Motors Ltd) will be reducing stake from 66.60 per cent to 49 per cent," Hero Motors said in a statement.
The domestic firm, however, did not elaborate on the financial details of the transaction. Meanwhile, Kiriu, which is an affiliate of the diversified Sumitomo Corporation, will strengthen its shareholding following the acquisition of stake from HML to become a majority partner in Munjal Kiriu, it added.
"To lead Munjal Kiriu Industries (MKI) toward more sustainable growth and financial stability, two partners have determined to make MKI a consolidated affiliate of Kiriu by changing the percentage of shareholding from the previous 33.4 per cent to 51 per cent," Hero Motors said.
The company further said HML Managing Director Pankaj Munjal has been elevated to Chairman of MKI.
"The new management team will be functional enough to gear up improving overall levels of quality, cost competitiveness and delivery indicators with Kiriu's initiative and Hero's support," Kiriu Corporation President and Representative Director Junichi Hashiguchi said.
MKI also plans to invest Rs 160 crore (Rs 1.6 billion) over the next two years to expand its existing capacity.
"MKI will install another new casting line in the current Manesar plant by the latter half of 2012 to ramp up production in response to the rapidly increasing demand of the Indian automotive industry," the statement said.
It, however, did not share other details on its current capacity and how much capacity will be added following the expansion programme.
