Hero Honda to pay Honda for licensing till 2014

Hero Honda said the amount is in line with its existing rate of royalty payment, which is about 2.7% to 2.8% of net sales. For the existing products, the Indian group will stop paying royalty by June 2014

New Delhi: India's largest two wheeler-maker Hero Honda will pay Honda 45 billion yen (about Rs2,450 crore) till 2014 as part of a new licensing agreement signed between the Hero Group and the Japanese auto major after deciding to part ways on their joint venture, reports PTI.

Hero Honda Motors (HHML) said the amount is in line with its existing rate of royalty payment, which is about 2.7% to 2.8% 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 licensing agreement, which enables HHML to continue producing, selling and servicing its current products. Consideration for the licensing agreement was 45,000 million yen 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% stake in Hero Honda for Rs3,841.83 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% to 2.8% of net sales and it will remain the same even in future," Mr Sud told PTI.

The royalty payment will gradually taper off from about 2.75% now to 2.2% 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," Mr Sud said.

Shares of Hero Honda ended 0.80% higher at Rs1,709.65 apiece on the Bombay Stock Exchange today.

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De-tariff third party motor insurance rates: IFTRT

Indian Foundation of Transport Research and Training has demanded freeing of the third party motor insurance premium rates to make claims fair

Indian Foundation of Transport Research and Training (IFTRT) has demanded freeing of the third party motor insurance premium rates to make claims fair.
Though regulation of the tariffs in the non-life sector was withdrawn in 2007, third-party motor insurance continues to be regulated.

"There is a need to abolish the Third Part Motor Insurance Loss Poll Account and while putting the ceiling on maximum claim to the accident victim, de-tariff the third party motor insurance to bring free play of market forces," IFTRT said in a statement.

The Insurance Regulatory and Development Authority (IRDA) has proposed to increase provisioning requirement for insurers providing motor insurance covers.

IRDA had increased the provisions made for motor pool to 153% of book value for the four years till 31 March 2010, against 126% currently maintained by insurance companies.

This is aimed at enhancing solvency margins and make higher provisioning for third-party motor pool.

The IFTRT said the IRDA should bring in structural changes in the rules and regulations for filing the third party claims and settlement of claims.
It also asked the authority to consider fixing a ceiling on the claim awards by motor insurance tribunals.

With effect from 25th April, the IRDA has hiked the third-party motor insurance premiums by 10% for private cars and two-wheelers and 68% for goods and passenger vehicles.

The third party motor insurance segment is marked by unlimited liability and numerous instances of inflated and fraudulent claims.

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SBI Life records 33% growth in profit at Rs366 crore in FY’11

SBI Life Insurance reported a 33% growth in net profit at Rs366 crore for the financial year ended March 2011 on the back of increase in renewal premium income

Leading private sector insurer SBI Life Insurance reported a 33% growth in net profit at Rs366 crore for the financial year ended March 2011 on the back of increase in renewal premium income.

"We continue to be profitable from operations side as we keep our expenses low. Bancassurance (bank channels) and agency force is helping us to sustain profits," SBI Life Insurance managing director MN Rao told PTI.

SBI Life Insurance is a joint venture between State Bank of India and BNP Paribas Assurance. SBI owns 74% of the total capital in the JV and BNP Paribas Assurance holds the remaining 26%.

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