Hero MotoCorp, the world's largest two-wheeler maker, today reported its Q1 FY2020 results. The company reported revenues of Rs 8,030 crore, down 10 percent YoY.
The company sold 1,842,920 two-wheelers (-10.5%) in the April-June 2019 period, compared to 2,060,342 units in the same period last year. For Q1 FY2020, the Profit After Tax (PAT) was Rs 1,257 crore, up 38 percent. Despite a drop in sales and revenue, the PAT grew because the company had deposited and created a provision for 'National Calamity Contingent Duty' (NCCD) including applicable cess in its Haridwar plant during prior years, while contesting the same on the ground that NCCD is in nature of excise duty and should be covered by area-based exemption. Following a favourable order from the Supreme Court, the provision has been reversed as exceptional item for the current quarter and the company has filed the necessary refund applications with the department.
Commenting on the results, Niranjan Gupta, chief financial officer, Hero MotoCorp, said: "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 monsoon and festive season offtake, as well as improvement in liquidity."
"Given the dependence of multiple sectors and millions of jobs on auto industry, it is imperative for the government to take urgent steps to boost consumption. We would, therefore, reiterate our appeal to the government to bring down the GST on two-wheelers to 18 percent from the current level of 28 percent, in order to provide the much-needed relief to the sector. A reduction in GST will lower the cost of the two-wheeler and spur demand, with the consequent growth in volumes offsetting any impact on the government revenue," added Gupta.
In the first quarter of the fiscal, Hero MotoCorp expanded its premium motorcycle product portfolio with the launch of the XPulse 200, XPulse 200T and Xtreme 200S. The company also took a lead by becoming the first OEM to receive BS VI certification for a motorcycle. In April 2020, Hero MotoCorp received the certificate for Splendor iSmart motorcycle from the International Centre for Automotive Technology (ICAT).