The deal is so structured that while Hindustan Motors, along with its associate companies, will sell its stake for Rs 65 crore, but at the same time will invest Rs 43 crore to buy redeemable preference shares of General Motors India.

In effect, the cash inflow to HM from the sale of its equity stake will be Rs 22 crore, as Rs 43 crore is ploughed back in the form of preference shares. The tenure of the redeemable preference shares and the dividend payable to HM is not known at present. As part of the buy-out, GM is buying 6.5 crore equity shares of Rs 10 eachin General Motors India, that is at par, from Hindustan Motors Ltd and its affiliate companies for Rs 65 crore. When GeneralMotors and the C K Birla group had made a formal announcement last week about parting ways in the 50:50 joint venture, the Rs 43 crore preference shares deal was kept under wraps.

In a separate development, General Motors Corp is pumping in an additional equity of $20 million in General Motors India for funding its operations, sources added. Sources said that during the discussions held between the two, Hindustan Motors indicated its reluctance to bring in further funds as equity in the joint venture.

The joint venture was floated in 1994 for assembling, manufacturing and selling automotive products under a technical licence from Adam Opel AG of Germany and management expertise from General Motors Corp. The equity capital of the company is Rs 130 crore, brought in equally by the two joint venture partners the CK Birla group including HM and General Motors Corp.