Hero Q3 net, sales slip on demonetisation
09 February 2017
Hero MotoCorp, the country's largest two-wheeler maker, saw a big decline in sales and revenue in the wake of the government's demonetisation drive, causing a marginal decline in its fiscal third quarter net profit.
Net profit for the October-December 2017-17 quarter declined 2.6 per cent to Rs772 crore while income from operations slipped 9.7 per cent to Rs6,780 crore compared to Rs7807.77 crore in the corresponding period of the previous fiscal.
The company had posted net profit of Rs793.23 crore in the same quarter a year ago.
The number of units sold in the quarter declined almost 13 per cent from a year before, to 1.47 million. ''The market scenario has now begun improving,'' said Pawan Munjal, chairman.
Hero MotoCorp reported a drop of 12.82 per cent in its sales during Q3 to 14,73,548 units, as against 16,90,354 units sold in the corresponding quarter of FY '16.
''The third quarter of this fiscal was historic, with the government taking an unprecedented and bold move to bring about digitisation of the economy, higher tax compliance and creating a transparent and inclusive financial system,'' said Pawan Munjal, chairman and managing director and chief executive officer of Hero MotoCorp.
''The industry did witness some negative sentiments during the October-December quarter, but with the agility shown by the government in bringing about a slew of measures to aid the citizens at large, the market scenario has now begun improving,'' Munjal was quoted as saying in a statement.
Sales haven't picked up yet as January sales also slipped 13 per cent to 48,000 units while two-wheeler market volumes as a whole fell seven per cent.
Bajaj Auto also took a hit in profit and revenue during the quarter. Profit slipped five per cent to Rs924 crore and income from operations by nine per cent to Rs5,354 crore. The Pune- headquartered company, which also sells three-wheelers, saw its January two-wheeler sales decline 16 per cent to 210,000 units. Three-wheeler sales declined 27 per cent to 30,093 units
''Moving forward, the government's policies - aided by the measures announced in the Union Budget – should help in faster long-term growth in the country. This would help the industry in maintaining its positive outlook and consequently change the face of 'Bharat' – the India beyond our cities,'' Munjal said.
Munjal said he was hopeful of the implementation of the GST in the second half of the year. With all these factors coming into play, 2017 may well turn out to be a turning point for the industry as well as the country's economy.
Meanwhile, Hero MotoCorp commenced commercial production at its new manufacturing facility at Halol, Gujarat.
''With this, the company now has six manufacturing plants, including five in India - Dharuhera, Gurgaon, Haridwar, Neemrana and Halol - and one in Colombia,'' the statement pointed out.
''Hero MotoCorp's second global manufacturing facility is coming up in Bangladesh and will be operational later this year,'' he added.