Report – Hero Motocorp to pay minimum royalties to Honda Motor Company from June
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After breaking up with Honda in 2010, Hero Motocorp will finally stop paying heavy royalties to the Japanese company come June 2014. The stoppage of royalty installments would reflect an immediate profit of Rs 415 crore.
A report on Mint breaks down the numbers. The Munjal family – owners of Hero Motocorp – bought out Honda’s 26 percent stake for a sum of Rs 3,842 crore, breaking it up into installments that end on June 2014.
Models like the Maestro, Ignitor and Impulse still warrant loyalty, however, as the technology for these models were sourced from Honda after the break-up. Continuing with the numbers, the reports says that royalty for these models is Rs 50 crore per year and with sales picking up, it could reach Rs 100 crore.
Hero Motocorp had its highest ever sales at 6.24 million units in 2013. Apart from expanding its operations in India by launching model after model, the company is also spearing its wings into other markets in the world. It had recently entered Turkey, followed Bangladesh. There was also a new manufacturing facility – the company’s first outside India – announced in Bangladesh.
Hero Motocorp is a debt-free company and is sitting on a cash pile of almost Rs 4,000 crore. The company’s annual report isn’t out yet and is expected to be published later this week.
Hero had recently launched the Hero Xtreme refresh, 2014 Hero Glamour and Hero Glamour FI and gave the ever-popular Hero Splendor some much needed graphics and upgrades like alloy wheels.
At the Auto Expo 2014, Hero Motocorp had showcased a bevy of new vehicles, including radical concepts like the Hero Leap, Hero iON and the Hero Splendor Classic Pro Cafe Racer.
[Source – Mint]