The country's largest two-wheeler manufacturer, Hero Honda Motors has announced a 25 per cent increase in net profits at Rs 728.3 crore in 2003-04 from Rs 581 crore in the previous fiscal, and also a massive 1000 per cent total dividend for the year.
The company's net sales surged by 14.3 per cent to Rs 5,832 crore during the fiscal as against Rs 5,101 crore in the previous year, Mr Pawan Kant Munjal, Managing Director, Hero Honda, said at a news conference.
"Due to the good response to all the five new models launched in 2003-04, we have also bettered our market share in the motorcycle market by four per cent to 47.6 per cent in the year," he added.
Despite increasing pressure on margins, Hero Honda's operating margins increased marginally to 15.56 per cent in the year.
However, Mr Munjal said that margins, due to the rise in raw material prices, would be under even higher pressure in the current fiscal. There, however, is unlikely to be an increase in prices for the end product consumer. Hero Honda is also optimistic about garnering a double digit growth in volumes in the current fiscal as well, going by positive broad indicators such as higher GDP growth, anticipation of good monsoon, declining interest rates, and renewed investment in infrastructure which would boost demand.
Hero Honda had earlier announced a volume growth of 23 per cent in the last fiscal with sales of 2.07 million bikes. Though exports account for a small component of this total number, it may get an impetus soon. According to Mr Munjal, the company is currently in talks with its joint venture partner, the Japan-based Honda to supply motorcycles from India, which would eventually be sold under the Honda brand. "This is still in the discussion stage," he said.
Currently, Hero Honda exports motorcycles only to those countries where Honda is not present. The company has also started exporting components to Honda in small numbers, which will be subsequently increased.