Though hit by adverse foreign exchange movements, Hero MotoCorp has posted a 20 per cent increase in net profit for the fourth quarter ended March 31.
Net sales in the quarter were up 11 per cent, with the world's largest two-wheeler maker posting highest-ever quarterly unit sales - up 8 per cent at 1.57 million. EBIDTA margin for the period stood at 15.33 per cent.
“There has been a cost increase in the quarter, 75 per cent of which is because of forex fluctuations. Steel and aluminium prices have gone up, the impact of which will be felt in the first quarter of the current fiscal. We expect no further upsurge in raw material costs,” Mr Ravi Sud, CFO, said in an investor call.
For 2011-12, the first complete fiscal after the break-up with Japanese partner Honda, net profit was up 23 per cent. Net sales in the year went up 21 per cent.
PRICE INCREASE
To offset the input cost rise, the company has also taken a price increase of Rs 500-1,000 across its models from Wednesday onwards. This follows the price increase on March 15, in order to offset the two per cent rise in excise duties in the Budget.
Hero paid about Rs 200 crore as royalty in Q4 for existing products, down from Rs 220 crore paid in Q3. This is part of an amortised payment as part of a licensing agreement with ex-partner Honda, which is valid till June 2014. On new models – Impulse and Maestro, a royalty of Rs 3 crore was paid in FY12.
Mr Sud also said that Hero's tax rate would go up to 22-23 per cent from FY14, as the tax exemption on profits at its Haridwar plant ends in the current fiscal. In FY12, it paid 15 per cent as overall tax rate. After expansion, the Haridwar facility is expected to supply 40 per cent of total volumes this fiscal.
With capacity across three plants expected to go up to seven million units by July-August (current 6.6 million), the two-wheeler maker expects to grow above 10 per cent in FY13 (sales rose 15 per cent in FY12). “We need to preserve cash for new capacity in the next 12-24 months. Soon we will announce a new plant,” Mr Sud said.
While a complete re-branding of its portfolio to Hero from ‘Hero Honda' will happen by end of this fiscal, the company is also starting exports of 100cc and 125cc bikes to Africa and Latin America in the first half. Partners have been identified, with assembly planned in some markets, another official said.
The company's shares on the BSE were up 0.45 per cent to Rs 2,245 on Wednesday.