NEW DELHI, Aug 9: Facing a demand slump on account of slowdown in motorcycle sales in rural India, country’s largest two-wheeler maker Hero MotoCorp expects sales to bounce back in the second half of the ongoing fiscal.
The company plans to launch an upgraded version of its flagship Splendor Pro and two new scooters by the second half to increase sales.
The company has already kicked off a range of margin improvement projects to optimise fixed costs that have helped in adding Rs 750 crore to its bottomline.
“Overall, the company expects the first half of FY2015-16 to be challenging on account of slowing motorcycle sales in rural India,” the company said in its annual report for 2014-15.
However, higher government spending in infrastructure could propel a stronger recovery in the second half, in both urban and rural India, it added.
“To shore up performance, Hero is launching an upgraded version of its flagship product called the Splendor Pro as well as two new scooters by the second half. The company expects these launches to catalyse sales,” it said.
The two new scooters will be on completely new platforms developed by Hero MotoCorp on its own.
In his address to shareholders, company’s Chairman, MD and CEO Pawan Munjal said: “… Agricultural prospects are comparatively better, and the country is poised for viable recovery. In this fiscal itself, I anticipate a rebound in the capital goods production, which is usually the harbinger of revival in the manufacturing sector.
“Once the business cycle turns more positive – as it should, by the second half of this fiscal – I expect an uptick in demand across multiple consumer verticals.”
On measures taken up by the company to enhance its profitability, he said: “The company has launched a range of margin improvement projects that aim to optimise fixed costs. Some of these projects have already started showing results, and have so far added (over) Rs 750 crore to our bottomline, and we anticipate significantly higher savings in the next five years.”
He also said Hero’s parts business is now in excess of Rs 2,000 crore (USD 313 million) and is slated to touch a turnover of USD 1 billion.
According to the company, overall motorcycle sales that accounted for nearly 80 per cent of the two-wheeler industry, grew by 4.7 per cent to 13.06 million units in FY2014-15 from 12.47 million units in FY2013-14.
Hero MotoCorp sold 66,31,826 units in FY2014-15 as against 62,45,960, a growth of 6.2 per cent.
However, in the first quarter of 2015-16, Hero MotoCorp’s sales were down 4.04 per cent at 16,45,867 units compared with 17,15,254 units during the same period of previous fiscal. (PTI)
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