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| Hero Honda may use cash pile to offer spl dividend |
| Press Trust of India / New Delhi Nov 18, 2009, 20:45 IST |
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Hero Honda is sitting on a huge cash reserve of over Rs 4,000 crore and the two-wheeler leader is looking at many options, including issuing special dividend to its shareholders or capacity expansion, to use the fund.
Hero Honda chief financial officer Ravi Sud told PTI that the company could consider several options for utilising the huge cash reserve.
"Yes, we have a cash reserve of Rs 4,000 crore in our balancesheet. What the company will do with the fund, the board has to decide on that; but there are several options. One of them is to give special dividend to our shareholders," Sud said.
He, however, said nothing has been decided and the next board meeting is likely to take place in January only.
"Expanding our capacity can also be an option. Another possibility can be to use the money in buyback (of shares)," Sud said.
For buying back shares, the Munjals will have to rework their joint venture agreement with their Japanese partner Honda Motors. Hero Honda is a joint venture between the Hero Group promoted by the Munjals and the Japanese auto giant Honda Motors. As per the current agreement, both the partners hold 26 per cent stake each in the company now.
"Nothing has been decided. If anything has to done, then the board has to decide on that," Sud said.
The company could also consider merger and acquisitions to utilise this huge cash surplus, he added.
Hero Honda's net profit for the September quarter soared 95 per cent to Rs 597.14 crore, while total income rose by 26.78 per cent to Rs 4,128.15 crore.
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