Hero Honda Motors, the country’s largest two-wheeler manufacturer, today posted a net profit of Rs 598.8 crore in the fourth quarter of 2009-10, its highest to date, as compared to Rs 402.2 crore during the corresponding quarter of 2008-09, growth of 48.9 per cent.
The turnover for the just concluded quarter also went up by 20.2 per cent, at Rs 4,122.3 crore vis-à-vis Rs 3,430.4 crore in the corresponding quarter last year.
This comes on the back of Hero Honda’s highest ever sales in any quarter at 1,186,536 units, a growth of 18.9 per cent from the 9,97,855 units in the same quarter of 2008-09. “Across the board, all companies are expected to see better top line in the fourth quarter partly because of the momentum and partly because of the advanced buying before the budget in anticipation of increase in excise duty and therefore increase in prices,” said Rakesh Batra, national leader (automotive practice), Ernst and Young.
For the financial year ended March 31, Hero Honda’s net profit surged by 74.1 per cent at Rs 2,231.83 crore as compared to Rs 1,281.76 crore in the preceding financial year, while its turnover for the last financial year went up by 28.1 per cent at Rs 15,860.5 crore vis-à-vis Rs 12,382.25 crore.
According to Anil Dua, senior vice president (sales and marketing), Hero Honda Motors, “The company will continue to maintain the growth momentum of the last few years, though at a lower rate due to higher base effect and partial rollback of the stimulus, and hopes to sell five million units in 2010-11. This would be in line with the 12-15 per cent growth of the industry and help us to maintain our market share.”
Hero Honda Motors have earmarked a capex of Rs 300-350 crore for 2010-11 to enhance capacity and upgrade its existing plants. “From a capex of Rs 300-350 crore for 2010-11, we will spend Rs 130 crore in enhancing our capacity from 5.4 million units to 5.7 million units by August this year and this will help us to cater to the growing demand for two-wheelers at least in the 2010-11,” Ravi Sud, chief financial officer, Hero Honda Motors said.
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According to Sud, the company undertook a feasibility study for setting up a fourth plant in India and a decision on the location, investment and capacity would be taken in two months.
The company’s Ebitda margin for the year ended March 31 stood at 17.4 per cent as compared to 14.1 per cent in 2008-09 and comes on the back of higher production from the Haridwar plant, where the company is currently enjoying five year income tax exemption and 10 years exemption in excise duty. As a result, its effective tax rate has come down to 21.2 per cent as compared to 28 per cent in 2008-09.
The company plans to launch at least nine products in the current financial year, including one or two new models, besides variants of existing ones.
It has also announced a final dividend of 1,500 per cent or Rs 30 per share on face value of each share of Rs 2. Shares of Hero Honda closed down 1.18 per cent at Rs 1,896.9 after touching an intra-day high of Rs 1,918.9 on BSE.