The Hindu Business Line : Honda hopes to wipe out losses this fiscal

HONDA Siel Cars India today said that it would wipe out its accumulated losses by the end of the current fiscal year, with sales of the Honda City surging ahead.

Company officials said that at the beginning of 2003-04, Honda Siel had accumulated losses of Rs 75 crore, which would be wiped off this year, which is also its sixth year of operations in India.

"We are expecting a profit before tax of Rs 90 crore this fiscal, which will be utilised to get rid of the accumulated losses. After deduction of taxes, we would be ending this fiscal with a net profit of about Rs 10-15 crore," company officials said.

Honda Siel had a profit after tax (PAT) of about Rs 60 crore in the last fiscal, and a PAT of Rs 28 crore in 2001-2002.

Volumes of the Honda City have been revving up, particularly after the launch of the new City sedan in October 2003. Honda expects to sell 22,000 cars this fiscal as compared to 13,300 units sold in the last fiscal, Mr H. Yamada, President and CEO of Honda Siel Cars India said on the sidelines of a news conference announcing the launch of the new Honda Accord.

The company further expects to end this fiscal with a turnover of Rs 1500 crore, up from about Rs 800 crore last fiscal.

Meanwhile, Honda is facing a capacity constraint and has a backlog of 3,000 orders for the Honda City at present. "We currently have a total capacity of 30,000 cars, which will be increased to 40,000 units by next year with minimal investments. However, we will watch the market situation and wait till the next six months before taking a call on capacity expansion and investments," Mr Yamada said.

Honda Siel has invested Rs 650 crore in India till date.

Though non-committal when asked about future product launches, Mr Yamada said that the company would like to introduce the hatchback version of the City in India, the Fit, but that would not be done anytime soon.

"The decision to roll out the Fit would depend on several factors, first and foremost being the pricing. Given the market conditions, the Fit, being a compact car, can only be introduced at or below the Rs 4-5 lakh price band. Also, the impact of the FTA, which is coming up between India and the South East Asian countries, would also have to be assessed. We are however conducting a feasibility study for the Fit at the moment," Mr Yamada said.

He added that the FTA might make a difference on the percentage of locally sourced components in Honda's current models.

Meanwhile, Honda today announced the launch of a new variant of the Honda Accord, which comes with a 3.0 litre, 221-bhp V6 engine. The car has been priced at Rs 16.90 lakh (ex-showroom Delhi). Honda expects to sell 650 units of the new Accord in the next fiscal.