Hero MotoCorp Q2 FY2014-15 results, Rs 5000 crore investment

Hero MotoCorp Q2 FY2014-15 results, Rs 5000 crore investment

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Hero MotocorpQ2 of FY2014-15 EBIDTA margin (Earnings Before Interest, Depreciation & Amortisation) stood at 13.52%. Cumulative sales H1 (April-Sept’14) stands at 34,07,777 two-wheelers. Total turnover (Net Sales & other Operating Income) is reported as Rs 13,952 crore, and net profit after tax (PAT) of Rs 1,326 crore for H1 (April-Sept’14) over turnover of Rs 11,886 crore and PAT of Rs 1,030 crore in H1 (April-Sept’13). FY 2014-15 EBIDTA margin (Earnings Before Interest, Depreciation & Amortisation) for H1 (FY 2014-15) stood at 13.49%.

Through Q2 FY’15 Hero MotoCorp reported numerous milestones having begun operations in Colombia in July 2014, forming a wholly-owned subsidiary, HMCL Colombia SAS. Hero has undertaken construction of its manufacturing plant at Villa Rica, Cauca, which when operational by mid-2015 will have a capacity of 78,000 units, to be expanded to 150,000 units in phase II at a project cost of US $70 million with US $38 million in capex, and remainder to be used as working capital over the next 3 years. Hero has also made an equity investment through its wholly-owned subsidiary in Netherlands, HMCL BV. In the last quarter, Markus Braunsperger was appointed Hero MotoCorp’s Chief Technology Officer (CTO), and Sanjay Jorapur was appointed Chief Human
Resources Officer.

Pawan Munjal, Vice Chairman, Chief Executive Officer & Managing Director says Hero MotoCorp is only just beginning to see the impact it can make on the market through products and tech improvements. Heros’ team is confident to further build leadership upon rolling out its global range of new motorcycles and scooters. Dedicated focus on costs has paved the way for good margins. Rupee depreciation, which had adversely impacted certain sectors, inflating essential commodity costs has more or less stabilised. Hero MotoCorp will tackle any external pressures to protect its margins.

Hero MotoCorp has earmarked an investment of Rs. 5,000 crore towards new manufacturing plants, within and outside India, and an R&D centre within 3 years. The global investment comprises manufacturing plants in Colombia (Rs 200 crore) and Bangladesh (Rs 100 crore), 5th Indian plant in Gujarat (Rs 1,600 crore), and 6th Indian plant in Andhra Pradesh (Rs 1,600 crore), and Hero Global Centre for Research and Design at Kukas, Rajasthan (Rs 650 crore).

Production has begun at its Rs. 1,050 crore fourth manufacturing plant at Neemrana, Rajasthan with annual capacity of 7,50,000 units, aiming to reach the 100 million units cumulative production by 2020. Hero’s production capacity now stands at 7.65 million units a year, moving towards 12 million annual capacity by 2020. Expansion at the turn of the decade is aimed at 20 plants (manufacturing/assembly).

Neemrana plant production includes motorcycles and scooters. Going forward, high-end two wheelers will be made here. Hero is keen on overall 50% two-wheeler market share in India. Its motorcycles enjoy 50% market share, while in scooter segment is dominated by Honda Motorcycle and Scooter India (HMSI). With scooters growing at a faster pace than motorcycles, Hero only has two offering Pleasure and Maestro, and will launch new products early in 2015.