Hero Honda to pay around Rs 2,450 cr to Honda for licensing till 2014
30 April 2011;dailypioneer.com:New Delhi: India's largest two wheeler-maker Hero Honda will pay Honda 45 billion yen (about Rs 2,450 crore) till 2014 as part of a new licencing agreement signed between the Hero Group and the Japanese auto major after deciding to part ways on their joint venture. Hero Honda Motors Ltd (HHML) said the amount is in line with its existing rate of royalty payment, which is about 2.7 per cent to 2.8 per cent of net sales. For the existing products, the Indian group will stop paying royalty by June, 2014, it added. “... Honda and HHML have signed a new licencing agreement, which enables HHML to continue producing, selling and servicing its current products. Consideration for the licencing agreement was JPY 45,000 million and becomes due through 2014,” Honda Motor Co said in a statement. Last December, the Hero Group and Honda had agreed to end their 26-year-old relationship, with the Indian partner agreeing to buy out Honda's 26 per cent stake in Hero Honda for Rs 3,841.83 crore. When contacted, HHML Chief Financial Officer Ravi Sud said the amount to be paid to Honda till June, 2014, does not reflect any increase in royalty payment. “Hero Honda has been paying royalty to Honda at around 2.7 per cent to 2.8 per cent of net sales and it will remain the same even in future,” Sud told PTI. The royalty payment will gradually taper off from about 2.75 per cent now to 2.2 per cent by 2014 and after that for the existing products, the Hero group will not pay any royalty for the existing products, he insisted. “Even for new products, which we may get from Honda after June, 2014, the royalty will be in line with what we are paying today,” Sud said. Shares of Hero Honda were trading 0.95 per cent down at Rs 1,680 apiece on the Bombay Stock Exchange in the late afternoon today.
30 April 2011;business-standard.com:Ahmedabad: After rolling out five compressed natural gas (CNG) models last year, India’s largest passenger car maker, Maruti Suzuki India Ltd (MSIL), is mulling a CNG platform for all its makes. Speaking at the sidelines of the Society of Indian Automobile Manufacturers’ conference here, Alok Jaitley, general manager, homologation-environment planning, MSIL, said: “We are working on CNG models. We have already launched five vehicles on this platform and eventually plan to offer all our models on a CNG platform.” Maruti has 11 models in the market, excluding its two completely built units, the Grand Vitara sports utility vehicle and the Kizashi sedan. MSIL introduced CNG-driven variants of its Alto, WagonR and Estilo small cars, the multi-utility Eeco and the SX4 sedan last July. Already, the CNG variants comprise nearly 10 per cent of the net sales of these models, which are available only in Delhi and the National Capital Region, Maharashtra and Gujarat, Jaitely said. The company plans to offer the CNG variants in other states as the network of CNG stations expand. At present, the gas network covers not more than 28 per cent of the overall vehicles market. “Gujarat is one of the major markets for our CNG vehicles,” said I V Rao, managing executive officer-engineering, MSIL, adding that Delhi was the largest market for CNG as of now. The cost of operating a CNG vehicle is almost a third of a petrol car. CNG costs Rs 29.30 per kg, as compared to Rs 62 a litre for petrol and Rs 40 a litre for diesel.
30 April 2011;business-standard.com:Swaraj Baggonkar:Mumbai: Tata Motors is planning to launch a Nano model that will run 40 kilometres on a litre of diesel, matching the mileage of a typical 180cc motorcycle. It will be the most fuel-efficient car in India. The launch is expected this financial year. A senior executive of Bosch India, which is helping Tata Motors develop the engine for the model, said, “We have worked with Tata Motors for Nano’s petrol version and we are working with it for the diesel version too. The car has a two-cylinder, 700cc engine which develops healthy power without compromising on fuel economy. Although official test figures have not been revealed, we expect it to run 40 km on one litre of diesel.” A Tata Motors spokesperson said: “You are aware that Tata Motors continuously improves its products. But we do not provide guidance on our innovations.” At 40km/litre, the running cost of the new Nano will be Rs 1/km. The capacity of the fuel tank is expected to be 15 litres. For Tata Motors, the diesel version could finally attract customers opting for two-wheelers – the original idea behind the Tatas’ Rs 1 lakh car project. For instance, Bajaj Pulsar 180, which costs Rs 78,000 (ex-showroom, Mumbai), runs 40 km on a litre of petrol. However, Bajaj Auto, too, is working on a petrol car with Renault and Nissan and aims to offer 40km/litre. The car is slated for launch in 2012. Nano is the largest-selling Tata model in India with monthly sales of around 8,500. The country’s largest selling car, Maruti Alto, records monthly sales of 25,000 a month. With increased fuel economy, Tata Motors is aiming to target Maruti Suzuki, the country’s largest car maker, whose unique selling proposition is mileage. It markets Tata Indica on the basis of its mileage of 20-25 km/litre, claimed to be the best in the industry. Although the price of the diesel Nano is yet to be finalised, market experts say it will be 15-20 per cent more than the petrol version. The base version of Nano costs Rs 1.5 lakh in Mumbai (ex-showroom). The model is expected to do well as diesel is subsidised in India, unlike petrol. In Mumbai, unbranded diesel is 33 per cent cheaper than petrol.
30 April 2011;economictimes.indiatimes.com:Chanchal Pal Chauhan:NEW DELHI: The car market is losing pace. Fewer people visit car showrooms now and companies expect sales growth to slip below 10% this fiscal, after two years of high-speed run. Maruti Suzuki, Hyundai Motor, Tata Motors , Honda Siel Cars and Toyota Kirloskar Motors have all confirmed a drop in customer inquiries and a steeper fall in sales over the last two months when cost of ownership has increased on all counts-from sticker price and loan interest rate to tax and fuel prices. "The customer walk-in at our dealerships has dropped," Maruti Suzuki Managing Executive Officer Mayank Pareek says. "There is a significant change in the mood of customers as inquiries for cars are not translating in actual sales." Before that, the market was in a cruise mode. In fact, India beat China as the fastest-growing car market in 2010-11 with a 30% rise in sales when a slew of new cars and rising incomes lured people into showrooms in hordes. And most carmakers-from Mercedes Benz and BMW to Volkswagen and Toyota to Maruti Suzuki and Tata Motors-have been increasing production, portfolio and market reach to keep up with racing demand. But the mood has become less buoyant. "Customer's perception are changing and the rising cost of car is playing spoilsports," Hyundai Motor Director, Marketing & Sales, Arvind Saxena says. Hyundai expects weaker sales growth in the industry during the April-June quarter. A recovery depends on the movement of interest rates on auto loans, Saxena says. Auto loans interest rates have increased to 11-15% after six rounds of hikes in past one year. Bankers say consumer sentiment changes once interest rate touches 15% mark. "The higher monthly installment burden on loans has already impacted the psyche of potential customers of cars," says Ashok Khanna, who heads the vehicle loan business at HDFC Bank . "The much-expected northward movement of interest rates could further dampen the market in coming months," he adds. Another concern is the fear of a sharp increase in fuel prices. Many people expect oil marketers to increase petrol and diesel prices immediately after assembly election process is over next month in West Bengal, Tamil Nadu, Assam, Kerala and Puducherry due to increasing crude prices. "Customers are concerned about rising inflation coupled with the huge impact of surging fuel prices that directly jack up the costs of operating a car," says Price Waterhouse Auto Analyst & Partner Abdul Majeed. Toyota Deputy MD Sandeep Singh says there is a blip in western and southern markets. The company is diverting cars to its new dealerships coming across the country to maintain the inventory at normal levels, he adds.
29 April 2011;economictimes.indiatimes.com:NEW DELHI: The government will thoroughly scrutinise Reliance's operation of its D-6 block and consider if the company should be allowed to recover the costs of wells that are not pumping gas, government officials said amid growing concerns of dwindling supply from the biggest gas field in the country. The field's output has declined in recent months, prompting the government to direct Reliance to stop supplying gas to low-priority sectors to help customers who use gas to make fertilisers or to fire power stations. Output has dropped to about 50 mmscmd against the projected production of 69.8 mmscmd in the government-approved plan. Reliance says the D-6 reservoir has turned out to be more complex than it was envisaged but the company is considering several options to boost output from its flagship asset in its oil and gas business. Government officials say Reliance has not drilled as many wells as it had committed while two wells were not producing any gas. The issues are likely to be discussed in the Management Committee's meeting on May 2. The committee, chaired by DGH SK Srivastava, includes top executives of RIL and a senior oil ministry bureaucrat.
29 April 2011;business-standard.com:Sharmistha Mukherjee:New Delhi: Signalling the coming of age of Indian auto component makers, Hero Motors has bagged a contract to become the sole international supplier of gearboxes for BMW’s motorcycles for both domestic and global markets. Gearboxes are one of the most critical parts in an automobile and involve high-end engineering. Hero Motors is part of the $4.5-billion Hero Group. Pankaj Munjal, managing director, Hero Motors, said, “We have developed the gearbox ourselves. Usually, components such as engines and transmissions are made by the company itself, as they involve advanced technology. We have achieved the expertise. BMW Motorrad will source gearboxes from us for products it sells globally.” The agreement would be for five-eight years depending on the transmissions sourced for different products by BMW Motorrad. The deal was closed on Tuesday. “That Europe is the best place for sourcing automobile components is not necessarily correct. The landscape is changing. Our transmission business, for one, has been growing over 70 per cent a year for the last few years”, said Munjal. Indian companies export over $5 billion worth of automobile components in a year. BMW Motorrad saw 12.3 per cent growth in the last financial year and sold 110,000 motorcycles. The company is already executing contracts worth over $200 million for supplying components to a Canadian company, Bombardier Recreational Products, and Germany’s BMW. BMW’s motorcycle business is not new to India. It has had a long relationship with Hero Motors. BMW Motorrad forayed into the Indian two-wheeler market in the mid-1990s in partnership with Hero Motors with a mid-sized single-cylinder motorcycle. While it sold a few bikes, the venture was closed due to the small size of the Indian superbike market that time.
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