According to a company release, Siel will buy back 15 per cent of the enhanced equity worth Rs 54 crore from Honda Motor Co by 2000-2001 and be able to increase its stake to 20 per cent in the total authorised and issued capital of the company. The equity stake of Honda in the joint venture then would be 80 per cent. The joint venture which was proposed to be 60:40, was restructured as 90:10. Siel's equity participation will be halved from the proposed 40 per cent in the enhanced authorised capital of the company, according to a press release issued by the company.

The above proposal of the company has been granted the Foreign Investment Promotion Board(FIPB) approval last week, the release adds. The company proposes, through the enhancement of the authorised and issued equity, to meet its expenditure for further intensive indigenisation to reduce import costs and conserve foreign reserve.

HSCI will also be able to reduce its interest burden, improve profitability as well as be able to comply with the new auto policy guidelines with respect to bringing in over $50 million as foreign equity within the first three years of start of operations, the release mentions.

HSCI started commercial production from December 15, 1997 and sales from January 1, 1998. The company has already sold over 5500 units since its launch till August-end, and has acquired a market share of about 22 per cent in the segment in which it operates, the release adds.