Hero MotoCorp Q1 net profit down marginally at Rs 909.17 cr on higher commodity prices, tax expenses
During the quarter, Hero MotoCorp sold 21,06,629 units of two-wheeler as against 18,53,647 units in the year-ago period
New Delhi: Two-wheeler market leader Hero MotoCorp on Wednesday reported a marginal decline in standalone profit after tax to Rs 909.17 crore for the first quarter ended June 30, impacted by higher commodity prices and tax expenses.
The company, which had posted profit after tax (PAT) of Rs 914.04 crore in the same quarter last fiscal, said it is making a further investment of over Rs 130 crore in electric two-wheeler maker Ather Energy to increase its stake.
Revenue from operations during the quarter under review stood at Rs 8,809.82 crore. It was at Rs 8,621.83 crore in the same period last fiscal.
The two figures are not comparable as revenue from operations are net of GST since implementation on July 1, 2017.
During the quarter the company sold 21,06,629 units of two-wheeler as against 18,53,647 units in the year-ago period.
"The impact on the PAT in the quarter has been on account of the tax benefits coming to an end in Q4 FY18 at the company's manufacturing facility at Haridwar," the company said in a statement.
Total tax expenses in first quarter stood at Rs 433.57 crore as compared to Rs 379.04 crore in the year-ago period.
Moreover, EBITDA margin was impacted by commodity costs, although offset to a large extent by pricing and continuing cost management, it added.
Cost of raw materials consumed stood at Rs 6,131.69 crore as against Rs 5,475.71 crore in the same period previous fiscal, the company said.
Commenting on the performance, Hero MotoCorp Chairman, Managing Director & CEO Pawan Munjal said,"The Indian economy continues to grow in the face of global headwinds from several fronts. However, the industry has been adversely impacted by the volatility in commodity prices driven by global trends".
On the outlook, he said, "Despite these challenges, the industry will maintain the growth momentum during the rest of the fiscal, with consumption expected to remain high on the back of a normal monsoon and the upcoming festive season".
At Hero MotoCorp, Munjal said,"we are geared up to ride the positive momentum with new premium motorcycles and scooters lined up for launch in the coming months".
Hero MotoCorp also said it has acquired 66,320 compulsorily convertible debentures (CCDs) issued by Ather.
Post the investment, upon conversion of the CCDs, Hero MotoCorp's shareholding in Ather will increase, it said, adding the transaction is expected to be completed by 31 August, 2018.
"The post conversion shareholding of HMCL in Ather is indeterminate today since the conversion price of the CCDs would be determined on the basis of valuation of Ather in the subsequent funding round undertaken by Ather," Hero MotoCorp said.
Prior to the proposed investment, Hero MotoCorp's shareholding is 32.31 percent of the paid-up share capital of Ather.
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