Two-wheeler market leader Hero MotoCorp today reported a 14.05 per cent decline in net profit at Rs 476.53 crore for the fourth quarter ended March 31, 2015 due to a one-time impairment payment.
The company had posted a net profit of Rs 554.43 crore in the same period of the previous fiscal.
"This (profit after tax) is after impairment of Rs 155.04 crore (USD 25 million) of equity investment in Erik Buell Racing, Inc," Hero MotoCorp Ltd said in a statement.
US-based EBR, in which Hero MotoCorp had acquired a substantial stake, has filed for bankruptcy. The two-wheeler giant had acquired 49.2 per cent stake in EBR in 2013 for USD 25 million and had plans to market its products in the US through the EBR network.
The company's board, which met today, approved setting up of a wholly owned subsidiary (WOS) in the US for conducting the business of providing research, development and consulting services, distribution, marketing and promotion of two wheeler vehicles and other ancillary activities.
"This could also entail purchase of assets for establishing the business. The board has also approved the initial investment of up to Rs 35 crore in the aforesaid WOS," the company said.
Net sales of the company for the fourth quarter stood at Rs 6,793.87 crore, up 4.31 per cent, as against Rs 6,512.96 crore in the year-ago period.
Unit volume sales during the quarter were marginally down at 15,75,501 units as against 15,89,462 units in the same period of the previous fiscal.
For the fiscal ended March 31, 2015, the company said its net profit stood at Rs 2,385.64 crore as against Rs 2,109.08 crore in the previous year, up 13.11 per cent.
Hero MotoCorp net sales during 2014-15 stood at Rs 27,585.30 crore as against Rs 25,275.47 crore a year ago, up 9.1 per cent.
Unit volume sales grew by 6.17 per cent during the year at 66,31,826 units as against 62,45,960 units in the 2013-14.
Commenting on the results, Vice Chairman, CEO and MD, Hero MotoCorp, Pawan Munjal said: "Our technologically refined and performance-driven products have caught the imagination of our customers and allowed us to post growth of over 6 per cent in FY15 over the corresponding year."
The company said it has lined up an investment of over Rs 3,000 crore for adding capacities and brand building initiatives in domestic and global markets over the next two years.
This is in line with the company's vision of expanding its global footprint to 50 countries and total annual sales of 12 million units by the year 2020, it added.
Shares of Hero MotoCorp closed at Rs 2,354.10 per scrip, up 1.21 per cent from the previous close on the BSE.
On the future outlook, Munjal said the industry remained sluggish due to the slowing rural economy on account of poor crop realisation and moderating wages in the rural markets.
"Going forward, we remain cautiously optimistic in our near to medium term outlook. An overall improvement in the economy and positive market sentiments are required for the industry to get back to the trend of healthy double digit growth," he added.
The company's board, which met today, declared a final dividend of Rs 30 per share, over and above interim dividend of Rs 30 per share paid in August 2015, this translates into a total dividend of Rs 60 (excluding dividend distribution tax) for the year.