Honda Cars India profits for FY23 jumps over 521% to a record Rs 1,430 crore

On the back of restructured organisation and improved volumes, Honda Cars India has posted over 521% profit in operation for FY23 at Rs 1430.97 crore. This is the second consecutive year of profit registered by the maker of City and Amaze last fiscal year, having been in losses since FY20. 

This is the highest-ever profit recorded by the company, bettering Rs 1141 crore profits it registered in FY19.

The highest ever exports and improved volumes in the domestic market helped Honda Cars India post a 14% increase in revenues for FY23 at Rs 14,439.71 crore or US$1.72 billion in revenues. 

The financials have been sourced from business intelligence platform, Tofler. 

Reviewing FY23 earnings, the Director's report for Honda Cars India stated that 2022-23 has been a year of consolidation, post Covid. Although the year started again with supply chain disruption triggered due to geo-political factors, a mix of improved chip supplies, higher incomes and pent-up demand, especially for SUVs supported sales of Vehicle manufacturers.

Reflecting on its own performance, the Director's report added that Honda Cars India has made a strong business constitution, and the hard work done together over the past 2-3 years has finally made a very good business constitution for HCIL.

“HCIL is looking to make a strong entry into the booming SUV segment in India with the launch of its brand-new global model Honda Elevate in FY 2023-24," the note added. 

The Indian passenger vehicle market posted its highest-ever domestic sales of 3.9 million units, surpassing the previous peak in 2018-19, and an annual growth of 27%, Honda's growth was however modest at 7% to 91,418 units - leading to an erosion in market share, with the brand slipping to number 7 car maker in terms of sales in the world's third largest car market.

The Amaze’s sales grew by 33% since last financial year and is one of the most preferred family sedans in India. The Honda City has continued its legacy of success by being the largest-selling mid-size sedan in the country during the last year. 

The company posted its best ever exports volume of 22,764 units during the year 2022-23, registering a growth of approximately 17% since last year. Further, export of parts and components stood at Rs 1149.97 crore during the financial year.

To strengthen brand activities and reiterate the value of Honda, a new brand slogan- ‘A Honda Goes Beyond’ was introduced. The dealer network stood at 325 facilities in 242 cities during the Financial Year 2022-23.

During the year under review, the capital expenditure aggregated to Rs 151 crore, towards building, plant and machinery, equipment, vehicles, computers, furniture and computer software etc.

Role-based organisation, eyeing 1 lakh units break-even point

Having right-sized the organisation with the closure of the Greater Noida factory, Honda Cars India continues to improve its operation efficiency to meet the challenging market environment.

The company continues to take new initiatives to meet the challenging business situations in its continuous endeavour to become a high performing organisation.

“Complete automation and enhancing the sense of togetherness & involvement amongst the associates continues to be the focus areas of the Company,” the directors note added.

IN FY23, the hiring at higher positions was minimised and the hiring was majorly done at lower levels, i.e. at the trainees and Associate Manager level. 

A 100-thousand Break-even point manpower constitution along with the management constitution was maintained based on the ‘Pay for Role’ Concept introduced in FY22.

The company had introduced a role-based organisation, wherein all the operating heads, division heads, and department heads were designated as VP, GM or AGM. The company will continue with the same Pay for Role structure and guidelines.