Net profit and turnover in the corresponding quarter of 1998-99 stood at Rs 22.91 crore and Rs 323.58 crore. Motorcycle sales grew from 1,13,568 units to 1,61,466 units.

The company's market share has grown to 42 per cent in the first quarter from 38 per cent in the corresponding quarter of 1998-99. Hero Honda director Pawan Kant Munjal said, "We are targeting an ambitious growth this year to achieve a turnover of Rs 2,000 crore in the year 2000. The demand for motorcycles will continue to grow well."

Total expenditure during the first quarter stood at Rs 422.08 crore as against Rs 283.23 crore in first quarter of 1998-99. Gross profit after interest but before depreciation and tax rose to Rs 65.28 crore from Rs 38.45 crore.

Interest burden came down to Rs 1.73 crore from Rs 1.90 crore. Depreciation was higher atRs 7.70 crore compared to Rs 6.01 crore in first quarter of 1998-99.

A company press release stated that the capacity at both Gurgaon and Dharuhera plants has been expanded steadily and monthly production and sales have crossed a record 55,000 motorcycles.

The motorcycle industry has witnessed a tremendous growth in 1998-99 as compared to the scooter industry. Motorcycle sales overtook scooter sales for the first time in 1998-99 claiming a 41 per cent market share of the two-wheeler market.

The last six months has seen Hero Honda achieve several milestones. Sales of original 4-stroke motorcycle CD-100 crossed the one million mark. Splendour became the largest selling motorcycle model.

The company launched a new 156-cc motorcycle. According to company chairman and managing director Brijmohan Lall Munjal, "We focus on the customer. We also try to develop the motorcycle industry through new product introductions, technological innovation and regular investments in equipment and facilities. All this hashelped Hero Honda to achieve such remarkable results consistently."

INSIGHT
Volume growth boosts profit

Volume growth of 42 per cent has once again fuelled the first quarter growth story at Hero Honda Motors. Volume sales of 1.61 lakh units were aided by the capacity expansion of the Gurgaon facility. Another factor is the swing in two-wheeler demand from scooter to motorcycles. Stringent cost control has also helped buoy the operating margins.Enthused by this performance, the company's scrip is also trading precariously close to its fifty-two week high of Rs 1,250. More importantly, Hero Honda's decision to keep out of the scooter market for the time being and concentrate on the motorcycle segment augurs well for the future.

--Percy Dubash