The Hindu Business Line : Hero Honda net up 29%; plans 3rd plant in Jaipur

Profitable ride: MR BRIJ MOHAN MUNJAL, Chairman, Hero Honda, and Mr Pawan Munjal, MD, at a press conference in the Capital on Tuesday. -- Kamal Narang

New Delhi , May 30

Hero Honda Motors on Tuesday reported a 29-per-cent jump in its net profit for the fourth quarter and announced its plans to set up a new plant in Jaipur at an initial investment of Rs 320 crore.

"The plant will be set up within the next one year and will have an initial capacity of 5 lakh units, which is expandable to one million units," the company's Managing Director, Mr Pawan Munjal, said. The total investment for reaching full capacity would be around Rs 550 crore. He added that the company was also mulling a fourth plant. "We are looking at various options for one more plant after the third plant."

The investment for the new plant would be through internal accruals. The company further said it had been gradually scaling up capacity at its existing plants at Dharuhera and Gurgaon, both in Haryana. "Expansion of 4.5 lakh units at the Gurgaon plant is already completed at an investment of Rs 47 crore and expansion of additional 4.5 lakh units at the Dharuhera plant at an investment of Rs 96 crore is underway, and would be completed by August 2006," Mr Munjal said.

The company also said that it would launch eight new bike models in the current year, including a fuel injection model in the 125-cc segment called the Glamour FI.

Company results

Meanwhile, the company's net profit in the fourth quarter ending March 31, 2006, stood at Rs 267.19 crore, as compared to Rs 207.11 crore for the same period last year. Total income rose 16 per cent to Rs 2,299 crore. The company said that it expected a double-digit volume growth this year, but operating margins, which rose to 14.92 per cent in the fiscal fourth-quarter (13.78 per cent), would be under pressure.

Hero Honda also announced a dividend of 1,000 per cent for the last financial year.

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