Hero MotoCorp Q1 profit surges 36% on one-off gain of ₹737.5 cr

Our Bureau New Delhi | Updated on July 30, 2019

Hero MotoCorp’s exceptional gain came from the reversal of a National Calamity Contingent Duty fund for one of its plants (file photo)

Income falls 7% as unit sales dip 12% YoY

The country’s largest two-wheeler manufacturer, Hero MotoCorp, on Tuesday reported a consolidated net profit of ₹1,257 crore for the first quarter ended June 30, up 36 per cent from the ₹925 crore reported in the corresponding period last year, on the back of a one-off exceptional gain of ₹737.48 crore.

However, its total income from operations fell 7 per cent from ₹9,030 crore in Q1 FY19 to ₹8,410 crore in Q1 FY20. Its EBIDTA margin for the quarter was at 14.4 per cent, improving sequentially from 13.6 per cent in Q4 FY19.

Unit sales slide

Hero MotoCorp sold 18,42,920 units of two-wheelers during the period, which is a more than 12 per cent fall year-on-year from 21,04,949 units.

The company’s board of directors has recommended a final dividend of 1,600 per cent, i.e, ₹32 per equity share of ₹2, for FY19, which was approved by the shareholders at an AGM on Monday. The total equity dividend to be paid is ₹770.5 crore (including dividend distribution tax of ₹131.37 crore), Hero MotoCorp said in a BSE filing.

The company had earlier deposited and created a provision for ‘National Calamity Contingent Duty’ (NCCD), including the applicable cess, for its Haridwar plant while contesting it on the grounds that the NCCD is in the nature of an excise duty and should be covered by area-based exemption. Following a favourable order from the Supreme Court, the provision was reversed as an exceptional item in the latest quarter. The refund applications have already been filed, the company said.

During the quarter, the group invested ₹12 crore in its subsidiary HMC MM Auto Ltd, taking its cumulative investment to ₹48 crore.

“The overall economic and customer sentiments continued to be soft during the first quarter of this fiscal and their impact is clearly visible in the performance of the auto sector. The outlook for the rest of the year will be dependent on multiple factors, including the progress of the monsoon and festival season offtake, as well as improvement in liquidity,” said Hero MotoCorp CFO Niranjan Gupta.

Consumption boost

Given the dependence of multiple sectors and millions of jobs on the auto industry, it is imperative for the government to take urgent steps to boost consumption, he observed.

“We would, therefore, reiterate our appeal to the government to bring down the GST on two-wheelers to 18 per cent from the current level of 28 per cent. A reduction in GST will lower the cost of two-wheelers and spur demand, with the consequent growth in volumes offsetting any impact on the government revenue,” he added.

Published on July 30, 2019

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

This article is closed for comments.
Please Email the Editor