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Hero Honda Q2 net up 42 pc on higher sales

Our Bureau

NEW DELHI, Oct. 18

EFFECTIVE cost control, increased sales and better margins have fuelled Hero Honda Motors Ltd's net profit in the second quarter this fiscal by 42.2 per cent to Rs 139.84 crore compared to Rs 98.34 crore in the corresponding quarter last year.

The country's largest two-wheeler company sold 4.08 lakh vehicles in the quarter ended September 2002 as against 3.29 lakh units, a 46-per cent growth.

A Mumbai-based analyst said the performance of the company in the quarter was in line with expectations. "Their margins have improved in this quarter and they have also managed an across-the-board cost control," he said explaining the surge in profits.

The total expenditure was Rs 1,031.1 crore as against Rs 892.37 crore. Total turnover was Rs 1,258.16 crore over Rs 1,055.52 crore. For the first half, net profit was Rs 279 crore on a turnover of Rs 2,548.56 crore.

However, the fact that competition from rivals like Bajaj Auto and TVS Motor Co. is affecting Hero Honda is evident from the company's sales which declined during the quarter on a sequential basis. The profit also was almost flat during the period as compared to that in the first quarter. In the first quarter this fiscal, Hero Honda, a joint venture between Japan's Honda and the Munjal Group, had sold 4.22 lakh vehicles to post a profit of Rs 139.16 crore.

Hero Honda said the next six months looked "promising" for the company because of the festival season.

"We had set for ourselves an ambitious target of 1.8 million motorcycles and turnover target of over Rs 5,000 crore at the beginning of the current financial year. We are well on course to achieve the same, despite very challenging times", Mr. Brijmohan Lall Munjal, Chairman, Hero Honda, said in a statement here.

In the face of competition in the market from new four-stroke bikes launched by Bajaj and TVS Motor, Hero Honda has been working on newer models.

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