The Hindu Business Line : Hero Honda first quarter net up 16 pc

Hero Honda Motors Ltd today reported 16.2 per cent rise in net profit in the quarter ended June 30 at Rs 237.74 crore against Rs 204.45 crore in the corresponding previous period.

The net profit was impacted by the increase in input costs, which the company said it would offset by hiking product prices by the end of this month.

Mr Pawan Munjal, Managing Director, said: "Hero Honda has not passed on the increased raw material costs to its customers. However, in the past months there has been a substantial increase in the prices of steel, aluminium and rubber. We will shortly be announcing a price increase in certain models to offset the increase in raw material costs."

The company's turnover during the quarter under review rose to Rs 2,416.65 crore (Rs 2,007.63 crore), up 20.5 per cent. Significantly, operating margins dropped to 13.5 per cent (16.1 per cent).

"We announced several initiatives during the quarter, including eight new launches planned for 2006, capacity expansion at the Gurgaon and Dharuhera plants by 4,50,000 units each, which will be completed by August 2006, and increase in product capacity to 3.9 million units for this year," Mr Munjal said.

"We also announced the setting up of a third plant with production capacity of 5,00,000 units, which will cater to market demand beyond 2007."

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Hero Honda first quarter net up 16 pc