Hero Honda to pay Honda Rs 2,450 cr royalty till 2014

The country’s largest two-wheeler manufacturer, Hero Honda, will pay Rs 2,450 crore (45 billion yen) as royalty to the Honda Motor Corporation (HMC) till 2014 as part of a new licensing agreement signed between the Hero Group and the Japanese auto major. According to HHML, the amount is in line with its existing rate of royalty, which is about 2.7-2.8 per cent of net sales. For the existing products, the Indian group will stop paying royalty by June 2014. The royalty payment will gradually taper from about 2.75 per cent now to 2.2 per cent by 2014. The Hero Group would not pay any royalty for existing products beyond 2014.

Last December, the Hero Group and Honda had agreed to end their 26-year-old joint venture Hero Honda, with the Indian partner agreeing to buy out Honda’s 26 per cent stake in the company for Rs 3,841 crore.