Japan's Honda Motors will receive a total of Rs2,450-crore (45 billion yen) in royalty payments from the Hero Group under its new licensing agreement, over a 3-year period ending 2014.
Hero Honda Motors Ltd (HHML), India's largest two-wheeler maker, will now pay an annual Rs830 crore in royalty payments to Honda Motors for licensed use of technology, against the earlier projected Rs600 crore a year.
This will take Hero'a annual outgo on royalty payments to 3.7 per cent of it net annual sales turnover from 3 per cent earlier.
The Hero Group will have to pay for producing, selling and servicing all existing products.
Against this, Hero Honda Motors currently makes royalty payments of about 2.7-2.8 per cent of net sales to Honda Motors.
The Hero Group will, however, stop paying royalty on all existing products from June 2014.