India’s largest two-wheeler manufacturer Hero MotoCorp on Wednesday reported a 10.87% decline in net profit for the April-June quarter at Rs 548.6 crore as an over 10 percentage point higher tax outgo due to the expiry of tax exemption at its Haridwar factory impacted its profitability. This was the firm’s fourth straight quarterly decline.
Hero MotoCorp had received tax exemption at the Haridwar factory for five years that expired in March 2013.
The company’s turnover during the period also declined 1.4% at Rs 6,159.5 crore as its vehicle sales fell 5% during the quarter to 1.56 million units. The two-wheeler industry has been reeling under a slowdown in demand due to multiple fuel price increases and a sluggish economy.
“The fact that our operating profit improved over the previous as well as the corresponding quarter last year, despite a marginal de-growth in our volumes during the quarter and the overall economic downturn, is a strong statement of our intent and vision,” said Pawan Munjal, managing director and chief executive officer, Hero MotoCorp Ltd. “We are determined to sustain the trajectory of positive momentum in the coming quarters as well. Our product launches that are planned around the festival season should contribute towards accelerating growth.”
The company’s shares fell 1.5% to Rs 1,757.8 per share by the end of the day at the Bombay Stock Exchange.