Yamaha cuts share capital to write off Rs1,050 crore losses

Two-wheeler maker India Yamaha Motor, a subsidiary of Yamaha Motor Corp of Japan, has written off losses to the extent of Rs1,050 crore by reducing its capital, according to its submission to the Delhi High Court.
India Yamaha, which started operations in 2008 as a joint venture (JV) between Yamaha Motor and Mitsui & Co, is cancelling 105 crore equity shares of Rs10 each. The proposal hasbeen approved by the privately held company’s board already.

“The paid-up equity share capital of the company is hereby reduced from Rs171 crore divided into 17.1 crore equity shares of Rs10 each to Rs66 crore divided into 6.6 crore equity shares of Rs10 each,” the filing said.
The court approved the scheme on October 4. India Yamaha is writing off the losses as they are quite substantial and any future profits would not shrink them much, the company said in its submission.

With smooth operations key to good performance in a “highly competitive market”, the company needs to revamp its image and restructure its financial situation, the court has observed. “It would be difficult to reduce the (substantial accumulated) losses within a short span of time through operating alone. It is their considered opinion that the effective method of reducing losses in a short period of time is by reducing the share capital of the company and writing off losses against the same.”

India Yamaha’s shareholders who will take a hit in the write-off are Yamaha Motor, Yamaha Motor Asia of Singapore and Bussan Automotive Singapore.
Hiroyuki Suzuki, India Yamaha’s CEO and MD, had earlier told the media that for the Indian operations to break even, the company would have to sell 5-6 lakh units a year.

In a bid to turn its fortunes around, India Yamaha is rolling out gear-less scooters, to be followed up by launch of 100cc vehicles later, which may replace existing models like YBR 110 and Crux, which have failed to make much impact in India.

Additionally, it is raising capacities at Surajpur and Faridabad, taking aggregate output to 10 lakh units a year, which will be scaled up to 18 lakh units when a greenfield project in Tamil Nadu becomes operational.