The country's largest two-wheeler manufacturer Hero Honda Motors Ltd suffered its first quarterly decline in profit in almost three years as its net profit slid 1.7 per cent to Rs 491.7 crore in the April-June quarter. The decline occurred largely due to higher cost of raw materials even as the company's net sales during the quarter went up by 12 per cent to Rs 4,264.6 crore. Hero Honda sold 1.2 million two wheelers during the three-month period, a growth of 10 per cent over 2009-10.
"In the first half of the last quarter there were three sharp commodity price movements and managing costs during that period was difficult," said Ravi Sud, senior vice-president and chief finance officer, Hero Honda Motors Ltd.
"After May, prices have softened and we expect it to stay this way for some time now. Our brands remain very strong in the market and we are well prepared to protect our margins in the forthcoming quarters."
Following a change in policy of royalty payment in India, it was expected that Hero Honda's royalty payments to Honda Motor Corp may spiral as well but the company said there were no plans for such a move.
"Our royalty payments to Honda remain unchanged and there are no plans of altering them either," said Anil Dua, senior vice president (sales and marketing), HHML.