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    Despite weak sales outlook, company would continue to maintain EBITDA: Ravi Sud, senior VP & CFO, Hero MotoCorp

    Synopsis

    Ravi Sud tell in an interview that the company would continue to maintain EBITDA on same lines going ahead.

    ET Bureau
    The country’s largest two-wheeler maker Hero MotoCorp today beat market estimates to report a 36.5 per cent increase in net profit at Rs 796 crore. Despite the weak sales outlook on account of sub-normal monsoons, senior vice-president and chief financial officer Ravi Sud tell Sharmistha Mukherjee in an exclusive interview that the company would continue to maintain EBITDA on same lines going ahead. Edited excerpts:

    Hero MotoCorp’s net profit for the quarter has grown by 36.5 per cent. What are the factors behind this growth?

    First of all, there is a volume growth of about 2.5 per cent over the corresponding quarter which has resulted in an increase in net profit. Secondly, the input prices, particularly the commodity prices, have remained benign over the past several months now. This has also contributed significantly to the much better margins. As you know, we have instituted a margin improvement programme, called 'Leap' which has been consistently contributing towards better profits. This year so far, for the nine month period, Leap has contributed about 80 basis points and for the third quarter about 40 basis points. Leap will continue to benefit us going forward.

    Given the weak sales outlook, what are the expectations in the coming quarter?

    The industry continues to be sluggish and it is expected to grow by 1-2%. However, we expect to maintain the EBIDTA on the same line as the last three quarters.

    You have launched two new scooters recently. What has been the performance of these new products?

    Both Maestro Edge and Duet have received very positive response from customers. These are the very first of the products which have been developed by our own in-house R&D team. Thanks to these two new products, our share in the scooter market has gone up to about 20% at the end of December - up from about 14% in October. Maestro Edge is already available across the country and Duet will be available across markets nationally by the end of this quarter. So we look to gain further share in the segment going forward.

    With your Gujarat plant set to go operational soon, what is going to be your installed capacity?

    Our current total capacity is 8.1 million units and we expect to add another 750,000 units once the upcoming plant at Halol in Gujarat becomes operational in the second quarter of FY 2017. Beyond this, we will take a call on adding further capacity depending on market conditions.
    The Economic Times

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