Hero MotoCorp Doubles Capex Plan For FY20

Hero MotoCorp Ltd. has more than doubled its capex plan for fiscal year 2019-20 to Rs 1,500 crore, mainly to upgrade its portfolio for Bharat Stage VI emission norms and for its upcoming plant in Andhra Pradesh, a senior company official said Monday.

The capital would also be utilised for the development of new products.

“We have earmarked a capex of Rs 1,500 crore this fiscal. It will be utilised for Andhra plant, BS-VI upgradation and usual things like new product development,” Hero MotoCorp's chief financial officer Niranjan Gupta told reporters in New Delhi.

The country’s largest two-wheeler maker had earmarked Rs 700 capex in 2018-19.

Hero MotoCorp, which is trying consolidate its position in the premium segment, launched on Monday two new scooters to cater to domestic as well as international markets.

It introduced the Maestro Edge 125 FI at Rs 62,700. The company claimed it is India’s first scooter with fuel injection. The carburetor variants of Maestro Edge 125 are priced at Rs 58,500 and Rs 60,000 (ex-showroom Delhi).

Hero MotoCorp also introduced 110 cc Pleasure+ priced at Rs 47,300.

According to Gupta, Hero MotoCorp’s share in the scooter segment remained “under indexed” and there was enormous opportunity for growth.

“Premium segment in scooters is growing and we are also bringing in new products. It will also have a positive impact on our entry level scooters, which continue to bring in maximum customers,” Gupta said.

When asked about the outlook in 2019-20, Gupta said, “We expect second half of the fiscal to be better with expectations of a good monsoon and easing of liquidity in the market.”

He said the inventory levels at Hero MotoCorp’s dealerships remained at 45-50 days and that it has eased credit days for dealers depending upon their category.

Commenting on the new scooter launches, Hero MotoCorp's head of sales, after sales, and parts, Sanjay Bhan, said that the company has already made a strong and successful foray in the 125 cc scooter segment with the launch of Destini 125.

“Together with Maestro Edge 125 and Pleasure 110, we are confident that our portfolio will appeal to a varied customer set and subsequently, contribute towards growing our presence in the scooter segment,” he noted.

The launch of the new scooters follows the introduction of Hero’s premium motorcycles— the XPulse 200, XPulse 200T and Xtreme 200S.

On Monday, Hero MotoCorp shares rose 0.12 percent to Rs 2,512 apiece on the BSE while the benchmark Sensex fell 0.99 percent to end the day at 37,090.82 points.