2012 Honda City On Assembly Line

The 16 year joint venture, namely Honda Siel Cars India, came to an end finally. Shriram group firm, Usha International, exited the joint venture with Japanese partner, Honda Motor Company. The venture that was started in 1995, ended with Honda Motor Company buying the entire 3.16 percent stake from Usha International for Rs. 180 crore. The processes like change of name and other formalities will however take few more months. Usha International is said to have decided to divest in order to expand its core business. The partnership was slated to have come to an end one day because business of automobiles isn’t Usha’s core competence. But there were few problems existing in the partnership related to corporate governance and thus both the parties mutually agreed to bring the venture to an end.

“Usha feels that it was inevitable that some day the parting would come because automobiles are not really Usha’s direct business,” Dinesh Chhabra, CEO, Usha International, said.

The duo got into an agreement to form a venture when Honda wanted to settle in India. Usha by then never had any experience or background in automobile segment. But, Honda Motor Company wanted to manufacture cars that time and they found Usha to be the best match for them. Usha helped the Japanese partner to set up its presence in India and over the years brought some of the best products to the customers. It also helped the firm with some of its best people to run the business. The venture focused majorly on marketing and sales. After the split, Usha will use this amount from divestment into development and expansion of its own business.