The country’s largest two-wheeler manufacturer Hero MotoCorp on Wednesday reported an 11 per cent drop in net profit at Rs 548.58 crore for the first quarter ended June 30.

The profit was hit because of the expiry of the tax benefit for the company’s largest manufacturing plant in Haridwar. The company was given 100 per cent tax exemption for a period of five years (April 2008- March 2013).

Hero MotoCorp’s tax liability also went up to 26.9 per cent for the quarter, compared with 16.3 per cent in the corresponding quarter of the previous year.

The lower net profit is also reflective of the newly levied higher surcharge in the Financial Bill 2013, Pawan Munjal, Managing Director and Chief Executive Officer, Hero MotoCorp, said.

Net sales of the company fell 1.30 per cent to Rs 6,126.84 crore (Rs 6,207.78 crore).

However, the company said it is optimistic about better sales in the near future, especially after entering new markets including Central America and Africa. It is now geared up for Latin American markets of Peru and Ecuador which should start from next month.

The company recently set up its international assembly unit in Kenya.

“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,” Munjal said.

“Our product launches that are planned around the festive season should contribute towards accelerating growth,” he added.

During the quarter, the company sold 15.59 lakh units of two-wheelers, down 5 per cent from 16.42 lakh units sold in the same quarter previous year.

Shares of Hero MotoCorp closed at Rs 1,757.75 on the Bombay Stock Exchange, down 1.50 per cent from the previous close.

>ronendrasingh.s@thehindu.co.in

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