Hero Honda Q2 net up 26%; to launch 6 more bikes this yr

Excerpts from Midcap Radar on CNBC-TV18 Watch the full show » RELATED NEWS Hero Honda a market performer: Karvy Stock Broking Hero Honda has support at Rs 1600- 1580: Thacker ALSO READ See latest News about Hero Motocorp See previous management interviews See what other Experts & Brokerages are saying about Hero Motocorp Hero Motocorp BSE | NSE 30/05/12 Are Mutual Funds betting on Hero Motocorp?

Two-wheeler giant Hero Honda on Wednesday declared its quarterly results. The company's net profit was up 94.93% at Rs 597.1 crore versus Rs 306.3 crore compared to the same quarter last year, while its sales were up 26.68% at Rs 4,040.1 crore versus Rs 3,189.7 crore year-on-year (YoY).

In an interview to CNBC-TV18, the company's CFO Ravi Sud said the company's focus on the premium segment would continue even though its saw robust growth in scooters as well as all other segments.

Hero Honda may launch more products by the year-end, Sud said. "For the full year, we had announced that we will launch six-nine products. We have already launched six including the new Karisma ZMR. Now we still have six more products. I think in the coming months you will see all sorts of products," he said.

Here is a verbatim transcript of an exclusive interview with Ravi Sud on CNBC-TV18. Also watch the accompanying video.

Q: Tell me if one looks at these results closely, premium segment has driven the growth. Could you sense of what factors decide the premium segment has contributed to?

A:  Apart from the premium segment, we are also present in scooters and in September, we grew by about 40% in scooters. Apart from this, there has been all-around growth in all segments.

Q: But the premium segment has been the surprise package this time around. Do you see the company focusing on this segment in form of more investment, more models from that segment?

A: We recently launched our premium product - Karisma ZMR. We launched it in end of September. Going forward, the focus will continue.

Q: Are you also looking to revise the annual sales target?

A: We have already done 2.3 million in the first six months and have given a guidance that we should be doing more than 4 million. Our further guidance is that we should beat this earlier guidance of 4 million by a handsome margin.

Q: There have been talks of an additional production line at the Haridwar plant. Is that operational. Is that the kind of investment, which has gone into?

A: We are planning to increase the capacity of Haridwar plant from 4,000 a day to 6,000 and the increased capacity should be available to us sometime in the middle of the fourth quarter. What I stated earlier in the last quarter was: we were planning to spend about Rs 80-90 crore for building that additional capacity at Haridwar.

Q: What is the kind of impact which the Rico Auto workers strike has seen? Give me a sense from point of view of Hero Honda's workers who joined the agitation as a symbolic gesture. Does it concern you - the unrest in the entire belt of Gurgaon?

A: First of all let me talk to you about the impact what it had. I think except for losing our production in Gurgaon for half a shift on Tuesday, our operations have been normal all thought-out. We are at the normal production level. We are producing anything between 15,000-15,500 units per day at all three plants.

As far as industrial relation is concerned, this is something the workers and the management have to live with. My own view is that they can be solved and it benefits both parties. But in case, they linger on it is not only the workers suffer, the company, the management and the overall economy suffer.

Q: Could you give me a sense of the rough hit, which your business has taken on account of this strike?

A: No. In the month of October except of loss of half a shift of production in Gurgaon - because that day the plant was closed - our production is normal and operations are absolutely normal as of now.

Q: In the month of September?

A: In the month of September we lost to about 10,000-15,000 numbers because we had to develop an alternate source and it took us couple of days to develop the alternate source.

Q: I am not sure if you will be equipped but now that the premium segment has shown such brilliant sales, do you have any launches in the pipeline, which you are aware of?

A: For the full year, we had announced that we will launch six-nine products. We have already launched six including the new Karisma ZMR. Now we still have six more products. I think in the coming months you will see all sorts of products.

Q: Six more products before the year-end?

A: Yes.