The Firodia takeover of the company is bound to trigger the SEBI's takeover code and the company will have to make an open offer to the shareholders of Kinetic Honda Motor. The SEBI has asked Nestle to make an offer to its shareholders as the Swiss firm had bought three per cent stake from one of the co-promoters, the Khaitans and did not make the offer to the small shareholders. The price of the acquisition was not made public by the Firodias in their statement though insiders say that the deal would be around Rs 32 crore.

With this, the equity stake of Kinetic Engineering in the company will go up to over 76 per cent in the listed company. The Kinetic Honda Motor scrip remained static at Rs 42 ascompared to yesterday's closing while Kinetic Engineering was marginally up at Rs 97.60 (Rs 95).

In a statement to the stock exchanges, both companies said with the departure of Honda, the Kinetic Honda Motor will become a KEL group company and subsequently change its name. Both companies have been working as co-promoters and partners since 1985 and producing premium segment scooters -- Kinetic Honda ZX and Marvel.

As per the agreement, Honda would continue to provide technical support to the venture and the company will continue to make the current scooter models. The company will also continue to export vehicles under the Honda's network under Honda's brand name.

Honda Motor Corp is having a presence in the Indian market through its other joint venture with the Munjals of New Delhi which is making motor cycles and with SIEL to make Honda City cars.

Among Honda's various joint ventures, Kinetic was the only company which was not doing well. Despite 15 years of operations, the company was unable tobreach the 10 per cent market share in the scooter segment. Due to its low pricing, Bajaj Auto and LML are presently having a virtual monopoly in the Indian scooter market.

The new arrangement between the two partners is subject to all necessary government approvals. KEL has already filed an application today with the RBI for its approval. KEL has said that with the departure of Honda, high overhead costs of the Japanese managers would be reduced along with communication costs and office locations in Tokyo, New Delhi, Indore and Pune. It said Honda will continue to provide technology for the current products so that they can met the year 2000 emission norms.

It said the takeover of the joint venture company by the Indian promoters will reduce overheads by cutting out duplication of efforts in areas such as IT, training, selling and top management time. Further, Honda will also help the Indian company by providing it own manufacturing facilities in Japan or its authorised vendors for the critical partswhich cannot be indigenised at present.