Hero MotorCorp achieved 38% increase in profit in the first quarter of FY2020
India’s largest two-wheeler manufacturer, Hero MotoCorp has announced the results of Q1 FY2020. The splendor maker reported a 38% increase in profit despite fall in sales. In the first quarter (April-June 2019) of the financial year 2020, Hero sold 18,42,920 two-wheelers which is 10.5% less than the previous year’s numbers. In the same period last year, the company sold 20,60,342 units. This fall in sales is to be blamed at the increased insurance cost and addition of CBS and ABS safety net.
Hero’s Profit After Tax (PAT) stood at Rs 1,257 crores which is up by 38 percent. You might be wondering why the profit is increased as sales are down by 10.5 percent? THis is because the company had deposited and created a provision for ‘National Calamity Contingent Duty’ (NCCD). Hero included applicable cess in Hardiwar plant in the previous years while contesting that NCCD is in nature of excise duty and should be covered by the area-based exemption. So, after the positive orders from the Supreme COurt, these provisions have been reversed as the exceptional item for the Q1 and thus Hero MotoCorp has filed for necessary refunds from the department.
Also Read: Hero MotoCorp is working on various electric vehicle projects, launch in 2021
Commenting on the results, Niranjan Gupta, chief financial officer, Hero MotoCorp, said: “The overall economic and customer sentiments continued to be soft during the first quarter of this fiscal and their impact is clearly visible in the performance of the auto sector. The outlook for the rest of the year will be dependent on multiple factors, including the progress of monsoon and festive season offtake, as well as improvement in liquidity.”
“Given the dependence of multiple sectors and millions of jobs in the auto industry, it is imperative for the government to take urgent steps to boost consumption. We would, therefore, reiterate our appeal to the government to bring down the GST on two-wheelers to 18 percent from the current level of 28 percent, in order to provide the much-needed relief to the sector. A reduction in GST will lower the cost of the two-wheeler and spur demand, with the consequent growth in volumes offsetting any impact on the government revenue,” added Gupta.
In the first quarter itself, Hero launched three new premium motorcycle models and two new commuter scooters. XPulse 200 and 200T are adventure and tourer motorcycles. The Hero Xtreme 200S is a faired highway rider. And speaking about the scooters, Pleasure 110+ and Maestro Edge 125 FI were launched.
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