Struggling to make a mark in the Indian market, Japanese two-wheeler major, Yamaha Motors, has roped in Mitsui and Co Ltd as a joint investor in the new motorcycle manufacturing company that would replace the existing Yamaha Motor India Pvt Ltd, established by Yamaha Motor Corporation of Japan in October last year. Mitsui’s investment will take the form of an allocation of new stock shares to a third party issued by IYM for the equivalent of 30% of the company’s capitalization.

The joint venture, to be named India Yamaha Motor Private Limited (IYM), would take over the existing manufacturing and business operations of Yamaha Motor India Private (YMI) Ltd starting April, the company said in a statement on Wednesday.

Yamaha, which has so far invested Rs 1,600 crore in India, said it planned to eventually take it up to Rs 5,600 crore to strengthen its position.

After the restructuring, the company said, in the first year of operations (nine months period starting April 2008) it expects sales worth Rs 1,000 crore.

Mitsui, which had last year acquired 3% stake in Yamaha, will pick up 30% stake in the IYM, it added. “In this way, IYM will increase its total investment in the plant to the tune of Rs 5,600 crore (approximately 14.6 billion yen) and would utilize the same factory and office facilities as used by its predecessor, the company said.

Last year the Japanese bike major and Mitsui had agreed to review possibilities for the latter’s participation in various areas of YMC’s business activities and strength in overseas business and cooperative ventures in other areas of business. “The decision announced on Wednesday is a result of these reviews and repeated discussions with a focus on a comprehensive joint business venture in India, it said.

Yamaha had entered into a joint venture with the Escorts Group in 1996 to manufacture motorcycles in India. Since 2001, the company has been operated as the 100% YMC-owned subsidiary. In 2005, a separate sales company, Yamaha Motor India Sales Private Limited, was established, after which the Yamaha motorcycle business in India was conducted by two companies specializing in manufacturing and marketing respectively.