| Two-wheeler market leader Hero Honda today announced 29 per cent increase in post-tax profit for the fourth quarter ended March 31, 2006 at Rs 267.19 crore against Rs 207.11 crore during the year-ago period but cautioned that margins were under pressure. |
| Number two bike maker Bajaj Auto, which has vowed to regain the top spot, earlier this month reported a better-than-expected 69 per cent rise in net profit to Rs 347 crore in March 2006 quarter against Rs 204.63 crore in the year-ago period. |
| Hero Honda's best-selling models such as Splendor and Glamour have come under increasing pressure from new launches from Bajaj, TVS Motor, Suzuki Motor and Yamaha, and Honda's wholly owned unit. |
| Hero Honda's turnover for the quarter increased by 16 per cent from Rs 1,976.09 crore to Rs 2,298.91 crore. The company said it expected double-digit volume growth this year, but operating margins, which rose to 14.92 per cent in the fourth quarter from 13.78 per cent a year earlier, would be under pressure. |
| "Operating margins in the current fiscal are going to be under tremendous pressure because of steeply rising input prices," managing director Pawan Kant Munjal told reporters. |
| "The market is also very competitive ... It is going to be a tougher year, (but) we are willing to trade certain short-term gains to drive long-term growth," he said, adding that the company would not raise prices this year because of competition. |
| The company maintained its dividend for the year at 1000 per cent or Rs 20 a share, resulting in a total payout of Rs 455.39 crore, which is a little over half of the net profit earned for the entire fiscal. |
| Net profit for the full fiscal grew by 20 per cent at Rs 971.34 crore from Rs 810.47 crore, while turnover during the period increased by 17 per cent to Rs 8,866.71 crore from Rs 7558.55 crore. Operating margin for the year declined to 14.45 per cent from 14.56 per cent reported for 2004-05. |
| The new plant, to be set up in Jaipur with an initial capacity of 5 lakh units a year, will see an investment of Rs 300-320 crore and is expected to be commissioned in a year. |
| The company also plans to build its fourth plant, the location of which will be decided after commissioning the third plant. |
| The company today also said in order to meet the next festive demand, production capacity will be increased to 3.9 million units with an investment of Rs 143 crore at its existing units at Gurgaon and Dharuhera in Haryana. The commissioning of the third plant will take the company's total capacity to 4.4 million vehicles per annum. |
| Hero Honda today said eight product launches, including variants of existing models are planned for the current financial year. The company had sold three million vehicles in 2005-06, fetching a market share of around 48 per cent. |
| The company's shares ended down nearly 5 per cent at Rs 803.70 on the BSE. |
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