Hero Honda board to mull stock split
in Oct

The board of directors of Hero Honda Motors Limited will meet in October 2000 to mull the issue of splitting its stock.

The board will also decide on the ratio of stock split at its next meeting, Hero Honda director Pawan Kant Munjal told newspersons on Thursday.

However, company sources pointed out that HHML had decided to split its shares in the ratio of 1:2, that is one share of face-value of Rs 10 each would be split into two shares of Rs 5 each.

The company has also decided to introduce a new bike early next year, with the basic design and engine being sourced from its Japanese partner Honda Motor Company. Honda and the Hero Group hold 26 per cent each in Hero Honda.

The board had deferred decision on the stock split issue at its meeting held on May two, this year. ''There was no specific reason for having deferred it then. We just wanted some more time for thrashing out the details of the issue. We are likely to take it up at the board meeting in October,'' Munjal said.

Hero Honda had closed the 1999-2000 fiscal with a 58.26 per cent growth in net profit at Rs 1.92 billion as against Rs 1.21 billion a year ago. Its turnover for the year stood at Rs 22.70 billion, up 51 per cent from Rs 15.05 billion in 1998-99. It recorded a 60 per cent surge in net profit for the first quarter of 2000-01 fiscal to touch Rs 603 million from Rs 378 million a year ago. Its net sales for the quarter stood at Rs 7.28 billion, up 57 per cent from Rs 4.63 billion in the same period last year.

Hero Honda, Munjal said is also keen on foraying into the higher-end power segment of the motorcycle industry. In addition, the company is also planning to move into the sub-100cc segment.

''The final models are yet to be decided, but we are open on moving both ends."

In addition, the company is planning to introduce more models in the 'Street' category. ''We are planning to build bikes and position them in the scooterette segment. We are aiming to create a new market with these products.'' The company has not set a time-frame for introducing the same.

The company is also working on bikes powered with alternate fuels. Meanwhile, Hero Group chairman Brijmohan Lall Munjal said the group is not in favour of immediately picking up stake in the separate wholly-owned two-wheeler manufacturing subsidiary of Honda.

''We have an option to pick up stake in the venture, but are not planning to do so immediately.''

Hero Group foraying into Insurance

The Hero Group is planning to foray into the insurance sector in a joint venture to address the entire gamut of life and non-life insurance business.

Hero Group chairman Brijmohan Lall Munjal told newspersons that the Indian partner would control 74 per cent stake in the venture.

Though Munjal refused to divulge details about the foreign partner for the insurance foray, Zurich Insurance has reportedly been in talks with the company for the venture. "We will file for a license as soon as the government opens up the sector and invites applications. We intend to provide the entire range of insurance products in India,'' Munjal said. The government is planning to seek applications in the first week of August.

Earlier this week, Bajaj Auto Limited announced plans to enter the non-life insurance business. The company is engaged in dialogue with leading global players for promoting a joint venture to carry out this business.

''The company may initially apply for a licence on its own and subsequently induct a foreign partner,'' Bajaj Auto had announced.

The Insurance Regulatory and Development Authority is likely to issue guidelines for the protection of policy holders next week. The norms will detail the obligations of the insurance companies vis-a-vis customers.

UNI

Money

Business News

Tell us what you think of this report