Shares of Hero Honda tumbled 6.41 per cent to Rs. 1,847 on reports the Hero Group has agreed to increase royalty payments made to Japan's Honda Motor Company to 8 per cent of overall annual sales in return for a technology makeover and a stake-sale.
Reports say Hero Honda would make the increased payments till 2014, when the present technology sharing agreement would lapse and be renegotiated. Under the proposal, Japan's Honda Motor Company would supply Hero Honda Motors with technology for three new products, and the existing product portfolio would be retained.
In return, Honda would reduce its stake in the joint venture to 20 per cent from 26 per cent through a sale to the Hero Group's Munjal family at a discount to the current market price. Negotiations are at an advanced stage and a final decision will be made in the next few days, reports said.
The stock hit a high of Rs. 1,940 and a low of Rs. 1,793.15 on the Bombay Stock Exchange (BSE) today.
At the moment, the stock is trading at Rs 1,833, down 4.95 per cent or Rs 95.40.
