Two-wheeler major Hero MotoCorp Wednesday reported a 10.86 percent decline in net profit for the first quarter of the current fiscal, which stood at Rs.548.58 crore from Rs.615.46 crore in the corresponding quarter of the 2011-12 financial year.
The company's turnover which includes proceeds from net sales and other operating income declined marginally by 1.40 percent to Rs.6,159.52 crore from Rs.6,247.28 crore reported in the first quarter of last fiscal.
According to the company, profit was lower due to higher tax rate on account of the expiry of five years of 100 percent exemption in Haridwar, where the two-wheeler manufacturer has its largest plant.
With the expiry of the tax benefit, the liability on Hero MotoCorp went up to 26.9 percent for the quarter under review, whereas it was 16.3 percent in the previous quarter in the corresponding quarter of previous year.
"The lower PAT (profit after tax) is also reflective of the newly-levied higher surcharge in the Financial Bill 2013," the company said.
The firm's EBIDTA (earnings before interest, tax, depreciation and amortisation) margin stood at 14.8 percent from 15 percent in the corresponding period of previous fiscal.
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Sales during the quarter under review plunged by 5.05 percent at 1,559,282 units from 1,642,292 units sold in the corresponding period of 2012-13.
The sales, according to the company, were supported by two consecutive months of highest-ever sales of April and May when it sold 551,557 and 556,644 units respectively.
However, the company said that it was hopeful that its new product launches planned around the festive season will strengthen sales.
"Heavy and early rains in June have slowed down the momentum a bit, but we are optimistic about growth in the second half of the fiscal," said Pawan Munjal, managing director and chief executive, Hero MotoCorp.
"Our product launches that are planned around the festive season should contribute towards accelerating growth."
The company said that it will expand into Peru and Ecuador by the end of August.
"On the new market front, after entering Central America and Africa, we are now geared-up for Latin American markets of Peru and Ecuador which should be in the month of August," Munjal added.