Hero Honda Motors Ltd, which has about 55 per cent share of the country�s motorcycles market, boosted its net profit by 50 per cent to Rs 306 crore for the second quarter ended September 2008.
The company attributed this performance to the increase in sales volume and by implementing various cost cutting measures. The company�s net sales were up 35 per cent per cent to Rs 3,189 crore.
�Overall the two-wheeler industry has grown. This has been mainly been driven by Hero Honda. We have grown due to a single minded focus on customers and ensuring a fiscal discipline. We have also invested in brand building and expanded our reach to 3,400 touch points, a 50 per cent increase over the last two years,� said Mr Pawan Munjal, Managing Director, Hero Honda. In the July-September quarter the company sold 9.72 lakhs units compared with 7.56 lakh units in the same period last year.
He said that going forward the company would experience the benefit of the weakening commodity prices. �The commodity prices are softening. Our contracts are not very long term. Whether we will reduce the prices will depend on the market conditions at that time,� Mr Munjal said .
Looking ahead
The company said sales were likely to remain dull post the festive season. Despite the likelihood of interest rates going down, the company remained doubtful on the possibilities of retail finance improving.
�The cut in repo rates is a positive step. But we don�t know how much benefit the banks will pass on to the customers and if retail finance situation will improve. It is a matter of concern,� said Mr Munjal.
The company is aiming to sell more than 5.3 lakh units than it sold in the last festive season. It also plans to double production to 4,000 units at its Haridwar plant beginning next fiscal.
The company�s Vice-President, Sales and Marketing, Mr Anil Dua, said, �Over the last few months sales have increased in the deluxe and entry level segment and at the same time our share in the premium bike segment has doubled to over 20 per cent.� He said that the 100 cc bike market comprises two third of the two-wheeler motorcycles market and Hero Honda�s sales is also in a similar proportion to its overall portfolio.
When asked if the company would consider a sub Rs 30,000 bike, Mr Munjal said, �as a company we always evaluate various options and the changing market trends and accordingly bring out a product which comes at a certain price.�
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