Escorts Yamaha
Escorts - Yamaha Motors parting ways
ABSTRACT
The case traces the various developments from the time the joint venture took place till the breakup in 2000.Starting from1995, how the 50:50 joint venture (EYML) moved to Escorts divesting 24% equity to Yamaha Motors in mid 2000 making Yamaha Motors a majority stakeholder in the venture (74:26) to Escorts pulling out of the joint venture. Then Yamaha setting up a joint venture with Mitsui and Co. to produce motorcycles in India with the new venture called India Yamaha Motor Pvt. Ltd. The case also discusses whether the new JV is really a solution to Yamaha’s problems (failure) in India and what were the actual problems with both the companies
Keywords
Escorts, Yamaha Motors, Mitsui and Co., EYML, India Yamaha Motor Pvt. Ltd
Introduction
Yamaha Motors entered into a technical support agreement with Escorts in 1985 for starting the local production of Yamaha motorcycles. Yamaha and Escorts signed another contract in 1995 forming EYML to manufacture and market motorcycles in India with each company investing 50% of the capital for the original venture. EYML manufactured Rajdoot motorcycle at Faridabad and the RX and four-stroke YBX series at Surajpur plant.
In 1996, Escorts transferred its motorcycle manufacturing facility at Faridabad to the joint venture. Plans were to modernize and upgrade the Surajpur and Faridabad facilities with a Rs 3.75 billion budget. EYML would launch upgraded versions of the current high performance bike, RX 100, and RXG 135 to meet stringent emission norms. In 1997, a further upgraded RXZ 135, a sleeker version would be launched and the 4 stroke YBX 125 would be launched in February 1998 to meet the growing demand for fuel-efficient bikes. YBX 125 would deliver the best of both worlds-performances along with fuel efficiency. EYML also planned to launch 2-3 product variants every year.
In April 2000, Escorts announced that it was likely to sell around 20% stake in EYML to Yamaha Motors and
ABSTRACT
The case traces the various developments from the time the joint venture took place till the breakup in 2000.Starting from1995, how the 50:50 joint venture (EYML) moved to Escorts divesting 24% equity to Yamaha Motors in mid 2000 making Yamaha Motors a majority stakeholder in the venture (74:26) to Escorts pulling out of the joint venture. Then Yamaha setting up a joint venture with Mitsui and Co. to produce motorcycles in India with the new venture called India Yamaha Motor Pvt. Ltd. The case also discusses whether the new JV is really a solution to Yamaha’s problems (failure) in India and what were the actual problems with both the companies
Keywords
Escorts, Yamaha Motors, Mitsui and Co., EYML, India Yamaha Motor Pvt. Ltd
Introduction
Yamaha Motors entered into a technical support agreement with Escorts in 1985 for starting the local production of Yamaha motorcycles. Yamaha and Escorts signed another contract in 1995 forming EYML to manufacture and market motorcycles in India with each company investing 50% of the capital for the original venture. EYML manufactured Rajdoot motorcycle at Faridabad and the RX and four-stroke YBX series at Surajpur plant.
In 1996, Escorts transferred its motorcycle manufacturing facility at Faridabad to the joint venture. Plans were to modernize and upgrade the Surajpur and Faridabad facilities with a Rs 3.75 billion budget. EYML would launch upgraded versions of the current high performance bike, RX 100, and RXG 135 to meet stringent emission norms. In 1997, a further upgraded RXZ 135, a sleeker version would be launched and the 4 stroke YBX 125 would be launched in February 1998 to meet the growing demand for fuel-efficient bikes. YBX 125 would deliver the best of both worlds-performances along with fuel efficiency. EYML also planned to launch 2-3 product variants every year.
In April 2000, Escorts announced that it was likely to sell around 20% stake in EYML to Yamaha Motors and