Union Cabinet likely to approve Rs 4,500 FDI of Hero Group Today

Tuesday 29 March 2011, 00:00 AM by Vikas Yogi

The induction of Rs 4,500 crore foreign equity by Hero Investments Pvt Ltd (HIPL) is likely to be approved by the Union Cabinet on Tuesday. The money raised through this induction will be mainly used in funding 26 per cent stake of Japan's Honda in Hero Honda. As per industry sources, the proposal is likely to be discussed and approved by Cabinet Committee on Economic Affairs (CCEA) in a meeting on Tuesday.

Earlier, in the month of February, the proposal was recommended for consideration by CCEA as the capital infusion was more than the ceiling of Rs 1,200 crore. The leading Indian news daily, ET, quoted a source as saying, "Along with some other proposals, the Hero Group's proposal to raise Rs 4,500 crore will also be discussed by the CCEA tomorrow."

It is to be mentioned here that HIPL, which is the largest stake holder in the country's largest two-wheeler maker Hero Honda, had agreed to buy out the 26 percent stake of Japan based Honda in the Hero Honda for Rs 3,841.83 crore. HIPL holds 17.33 per cent stake in the company.