Short term disruptions due to the Covid -19 pandemic will not impact the long term opportunities in the Indian market and Hero MotoCorp Ltd – country’s largest two –wheeler manufacturer – is well poised to face the current challenges and capitalize on the opportunities in the future due to its strong financials, said chairman, Pawan Munjal in the annual report.
Investors are bullish on the short term prospects of the Hero as demand for its entry and executive segment motorcycles has revived quicker after the easing of the lockdown, due to faster recovery in demand in the rural and semi urban areas. Factors like good summer crop, decent monsoon, fiscal incentives from the government, less instances fo Covid-19 infections in rural areas aided the recovery.
According to Pawan Munjal, the short-term business outlook remains uncertain due to the COVID-19 pandemic. However, the long-term story of India and that of the two-wheeler industry remains intact, strong and positive.
“Your company continues to remain debt free and maintains a strong balance sheet. Its reserves have now reached ₹14,096 crore (US$ 1,988 million). The financial strength of the company augurs well and will help the company to successfully navigate itself into the future despite these trying times," added Munjal.
Over the last two years Hero has been trying to gain a foothold in the premium motorcycle segment by launching a new range of products in the higher price points.
Recently the Hero announced starting the wholesales of its new premium motorcycle Xtreme 160 as the company seeks to expand its portfolio of premium motorcycles to compete with competitors like Bajaj Auto Ltd and TVS Motor Company Ltd.
“We continue to remain a dominant leader with leading edge products in the entry and executive segment, while aggressively building our portfolio in the premium segment. Our recent market share improvement in premium scooters (125cc) is heartening and is a step in the right direction to win considerable market share in the scooter segment as well," Munjal added.
The New Delhi based manufacturer reported a decline of 26.88 % year-on-year decline in domestic wholesales to 450744 units in June due to Covid -19 related disruptions. On a sequential basis though, the company reported a robust 300% jump in dispatches as result of robust recovery in demand for its entry level motorcycles in rural markets.
In May, the company reported sales of just 112682 motorcycles and scooters after restarting manufacturing operation in its Haryana and Uttarakhand based factories.