Honda- Siel JV tug of war seems to be never ending. Mr. Siddharth Shriram minority share holder in the JV HSCI ( Honda Siel Cars India) may now file a petition against Honda in the Company Law Board and other regulatory bodies for the lapses in corporate governance norms. Reports said that the companies were extending an olive branch to each other, but the CLB move from UIL definitely points in the opposite direction. Shriram Industries owns five percent stake in HSCI through Usha Industries Limited ( owned by Siddharth Shriram). UIL, it is understood, may approach other regulators to address issues over the alleged opaqueness in the transfer of resources to Honda Motor Company (HMC).
The company has alleged it has received neither dividend nor return on investment through its 17-year association with HMC, while the Japanese auto maker received income in various ways from the Indian subsidiary. UIL has allegedly said that the company never got its share in dividend and ROI (returns on investment) in its 17 year partnership with Honda Moto Corp. However the Japanese company received income through various ways from the partnership. UIL is likely to approach other regulatory bodies, as allegedly the Japanese company was not transparent in the transfer of resources to Honda Motors. Despite Mr. Siddharth Shriram being one of the board directors, UIL was never taken into confidence in decision-making.
Moreover, the vital assessment related to investments plans and while HSCI was going through a serious financial crisis that too was not told to UIL till the last moment. Indeed UIL was communicated only through a circular on March 16 that HSCI is taking the Sick Industrial Companies Act route. Instead, the Indian company was told that the company needed a fresh investment of Rs.3,200 crore to establish an advance diesel plant in India and to back its aggressive plans of introducing small cars and diesel variants in the Indian car market. The HSCI board ignored a request by Shriram for a board meeting to discuss the financial position of the company. Whereas a resolution was passed on 17 march for the the infusion of fresh equity and has also filed it with the registrar of the companies. Implicitly Shriram’s request for the meeting is still pending.
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