But for the writing off of investments made in technology partner Erik Buell Racing amounting to ₹155 crore, Hero Motocorp’s profits for the March 2015 quarter would have moved up by 14 per cent compared with the March 2014 quarter.

That does not indicate all has been well with the company, though.

For one, the sales growth has been subdued at 3.7 per cent. With Hero getting about half its volumes from the rural markets, a drop in crop prices and rural wages has lead to a fall in rural demand.

Volumes showed a marginal decline of about one per cent in the recent March quarter compared with the year-ago period.

With volumes shrinking, growth in net sales was supported solely by a 4.7 per cent improvement in average realisations.

Second, even as raw material costs eased slightly, operating margins shrunk. Operating margins dropped to 12.3 per cent in the quarter against the 13.7 per cent last year. Apart from the weak topline, the company did not pass on the four per cent excise duty hikes considering the weak demand environment. Higher ad spends did their bit to dent margins too.

Volume outlook For 2015-16, the company expects a 5- 7 per cent volume growth. But this may not be easy to come by. With unseasonal rains now and the monsoons too not expected to be bountiful, rural slowdown is expected to continue into the next two-three quarters. While two new scooters are expected to be launched in the next few months, product launches in the motorbike segment are expected to happen only in the second half of the year. Margin expansion too, may not come by quickly.

Hero is gunning big for the export markets and plans to enter 50 new markets by 2019. This implies that ad spends will continue to be high.

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