Hero Honda Motors'' year of new models
31 May 2006
|Though he says that his company will face tremendous margin pressure in the current year, Pawan Munjal, MD, Hero Honda Motors, is looking at a double-digit volume growth in FY07. He is positive that the company is going to retain its leadership position this year too, with four new launches and four variants scheduled in the months ahead. Detailing Hero Honda Motors' plans for FY07, Munjal says that the company will launch four new models and four new variants. |
CNBC-TV18 shares its exclusive interview with domain-b.
What is your FY07 outlook in terms of industry growth and your own volume and margin outlook?
We are looking at a double-digit volume growth in FY06-07, but there will be tremendous pressure on margins this fiscal.
Any specific reason why you expect extra pressure on margins this year?
April started with metal prices going up and we think that going forward, metal prices would harden. The market is also becoming more competent. There are new entrants as well, so there are more players in the market. So obviously, there have to be concerns on the competitive scenario.
If there are pressures from the raw material side and you don't increase product prices, do you think margins could slip into single digits?
All I can say is that as far as the pricing goes, the current market scenario does not allow any of us to pass on cost increases to the customers. Most of the time we have to absorb and manage our own costs and improve our efficiencies to be able to manage our margins. I am not saying single or double digits, but the pressure on margins is going to be there.
Hero Honda Motors has announced its fourth quarter results. The company's Q4 net profit is up at Rs267 crore from Rs207 crore. Its total income is up at Rs2,298 crore from Rs1,976 crore. Its operating margin is down at 14.9 per cent versus 15.1 per cent.
What are you factoring in terms of volume growth for both your bikes and scooter segment?
We are looking at a double-digit growth like in the previous year. I think we ought to do very well this fiscal as well. We will definitely do middle and high double digits.