In a statement, Honda Siel Cars India Ltd (HSCI) said that both the partners had been discussing the appropriate plans for future business expansion and UIL, which held 3.16 percent shares in HSCI, decided to divest from the joint venture as it wanted to focus on its core business area.
The company said that the sale was on mutual consent and consisted of 18 million shares at a cost of 100 per piece, including a non-compete fee.
"We have shared a very successful and fruitful relationship with UIL over the past 17 years. I would like to take this opportunity to express my appreciation for Mr. Siddharth Shriram's contributions to HSCI and wish UIL a bright future," said Hironori Kanayama, president and CEO of HSCI.
Indian partner Usha International, promoted by the Shriram Group of companies, said in a statement, "Usha feels that it was inevitable that someday the parting would come because automobiles are not really Usha's direct business."
"According to the agreement with HM (Honda Motor), Siddharth Shriram has ceased to be a Director and the Chairman in HSCI," it added.
HSCI will now be a 100 percent Honda subsidiary in India. The process of changing the company name and other formalities will be completed over the next few months.
The deal would enable HSCI to invest in developing its own cars in the Indian market.
Last year, Honda ended its joint venture with Hero group by selling its entire (26 percent) stake in the leading two wheeler company to its Indian partner to focus on its own brand of motorcycle business.