Hero Honda Motors Ltd started benefiting from the decline in commodity prices. All its gain in margins in the March quarter came from a drop in raw material costs, unlike the preceding three quarters where savings on raw material costs were modest. In the last quarter, operating revenues rose by 22% and operating profit increased by 30%. In the first three quarters of the year, operating profit had risen by 25%. Apart from the savings on raw material costs, Hero Honda also gained from higher realizations.

Their average realizations rose by 8.4%, thanks in part to the excise waiver the company enjoys at its new plant at Haridwar in Uttarakhand. According to an analyst, unlike Bajaj Auto Ltd, Hero Honda hasn’t passed on the excise benefit to customers. The gains from the excise waiver, therefore, are reflected in the firm’s net sales and profit.

It began its operations at Haridwar in the first quarter of the previous fiscal year and has been steadily increasing production. Apart from the excise waiver for 10 years, there are various other incentives such as exemption on income tax for a specified period and subsidy on capital investment. As a result of this, an increase in output at Haridwar results in higher profitability for the firm. A recent report by Motilal Oswal Research states that Hero Honda’s earnings in this fiscal year largely depend on the extent to which it’s able to raise output at Haridwar, rather than growth in volumes.

Production at the new unit picked up in the March quarter and this is reflected in the high operating margin of 16% (15.1% in the year-ago period). On a per vehicle basis, operating profit rose by 15% to Rs 5,503.

Related News:
Hero Honda posts highest-ever march sales of 10%
Hero Honda positive on two-wheeler sales despite Nano launch 
New Hero Honda Hunk hits the Indian roads 
Hero Honda registers 3, 15,458 two-wheeler sales in january '09 

Best Selling Hero Honda Bike Models:
Hero Honda Hunk
Hero Honda CBZ Xtreme
Hero Honda Splendor NXG
Hero Honda Splendor Plus
Hero Honda Karizma
Hero Honda CD-Deluxe
Hero Honda Splendor Plus
Hero Honda Pleasure
Hero Honda Achiever
Hero Honda Glamour

Related Books on Hero Honda:
Bikes
Level 4- When My Bike Flies and Other Stories
The Mystery of the Stolen Bike

Add a comment

Posted by Amrith K.A on 22 April, 2009 5:32:26 PM IST #