Millennium Post

Hero-invested US company Erik Buell Racing files for bankruptcy

US-based Erik Buell Racing, in which two-wheeler giant Hero MotoCorp had a substantial stake, has filed for bankruptcy -- a development that may affect the Indian firm’s plans in the American markets.

Hero had acquired 49.2 per cent stake in EBR in 2013 for $25 million (about Rs 148 crore) and had plans to market its products in the US through the EBR network. Hero MotoCorp said in a statement that Erik Buell Racing and its subsidiary Erik Buell Racing LLC have filed an Assignment for Benefit of Creditors under Chapter 128 of the Wisconsin Statutes, which is similar to the federal bankruptcy law of the US, and have ceased their operations.

Hero had made the acquisition as part of its strategy to enhance technological prowess, post the break-up of its joint venture with Honda. The company had earlier entered into a technology sourcing pact with EBR in 2012 to strengthen presence in the high-end bike segment. The move was part of the Pawan Munjal-led company’s overall strategy to have multiple technology sources for different segments and enhance its own R&D capability.

Hero MotoCorp, however, maintained that the closure of EBR would not impact its R&D and future product line up. “Hero MotoCorp, with strong in-house R&D capabilities, remains confident that its future product line-up would not be affected despite EBR ceasing operations,” the company said.

The company’s Centre for Global Innovation, Research & Design, coming up at Kukas on the outskirts of Jaipur in Rajasthan, is expected to commence operations in financial year 2015-16. It will have around 600 engineers from India and around the world, it added.

Arm woes shave 4% off parent’s share price
Stocks of Hero MotoCorp on Thursday fell by nearly 4 per cent after US-based Erik Buell Racing, in which the two-wheeler giant had a substantial stake, filed for bankruptcy -- a development that may affect the Indian firm’s plans in the American markets.

The stock dropped 3.76 per cent to settle at Rs 2,428.85 on the BSE. During the day, it tumbled 4.31 per cent to Rs 2,415. On the NSE, shares of Hero MotoCorp fell by 3.74 per cent to Rs 2,430.10. Following the decline in the stock, the company’s market valuation dipped by Rs 1,896.9 crore to Rs 48,501.10 crore.

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