``We are planning to bring in additional equity through fund investors to raise resources for replacing two-stroke motorcycles with four-stroke models,'' Escorts Group chairman Rajan Nanda told PTI.

Asked whether Yamaha has agreed to dilute its stake, Nanda said ``We have informed them about the proposal. We are meeting in Singapore on September 28 to finalise the details.''

Declining to reveal the name of the investor or the price at which the stake was being offered, Nanda said Escorts and Yamaha would also have a shareholders agreement to support each other under the new dispensation.

After the equity infusion, the stake of both Escorts and Yamaha in the venture would come down to 37.5 per cent each. At present, Escorts Yamaha has a paid-up capital of Rs27 crore.

The equity infusion would generate less than Rs 100 crore to part-finance Rs 500 crore modernisation and expansion plan aimed at capturing about 30 per cent of the rapidly growing motorcycle market in the next three years. Having already pumped in about Rs 350 crore for converting bulk of its products from two-stroke to four-stroke vehicles, for meeting new environmental norms, the company would invest another Rs 140 crore, Nanda said.

The remaining funds would come from internal generation, he said ruling out market borrowing. The initial investment for the modernisation was made from revenue arising from the group's disinvestment in motorcycle, construction and piston businesses. As a result of the modernisation and product upgradation, 90 per cent of vehicles of Escorts Yamaha would be four-stroke by 2002-03, he said.