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Escorts sells motorcycle stake for Rs 100 per share

Tractor maker Escorts Ltd said on Thursday it had sold its 26 per cent stake in a motorcycle joint venture to partner Yamaha Motor Co at a premium of Rs 90 a share.

"We sold about 7.02 million shares at Rs 100 a share," a company spokesman said, giving the breakdown of the deal announced on Wednesday.

Escorts will also get another Rs 500 million from Yamaha through redemption of cumulative preference shares and loans, he said.

The spokesman said the money was expected in the next 10 days and the company could take credit for it in its first-quarter results if it arrived before the end of June.

India's minister of commerce and industry announced on Wednesday that he had approved a plan by Japan's Yamaha Motor to bring in Rs 1.2 billion in foreign direct investment to buy out the 26 per cent stake of its partner in Yamaha Motor Escorts Ltd.

The company began as an equal venture but Escorts sold a 24 per cent share to Yamaha last year at Rs 180 a share.

The divestment is aimed at helping the Escorts group focus on some of its core businesses of agriculture machinery, telecoms and healthcare.

Yamaha Motor Escorts Ltd, which makes motorcycles at its plant on the outskirts of Delhi, fared poorly in India's robust motorcycle market last year due to delays in introducing more fuel-efficient, four-stroke technology.

Its sales fell 32 per cent to 171,307 motorcycles in the financial year ended in March, giving it an Indian market share of 7.9 per cent. In contrast, the motorcycle market grew 20 per cent in the year to 2.16 million vehicles.

The Escorts group, a leading business house owned by the Delhi-based Nanda family, has interests spanning agriculture and construction machinery, auto parts, telecoms, software health and financial services.

Escorts shares closed down 1.74 per cent at Rs 76 while the benchmark Bombay index ended flat.

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