Hero MotoCorp’s capex may be less than Rs 1.5k cr

Hero MotoCorp’s capex may be less than Rs 1.5k cr

File photo for representation

Hero MotoCorp might see a reduction in its earlier-projected capex of Rs 1,500 crore for the current financial year, as the two-wheeler industry continues to face headwinds with no relief in sight from the prolonged slowdown, a senior company official said.

The country’s largest two-wheeler maker, however, expects things to be relatively better in the second half as compared to the first half of the current financial year due to several factors like expectations of pre-buying ahead of BS-VI transition and better response from rural markets due to a good monsoon.

“We had earlier provided a capex (capital expenditure) guidance of Rs 1,500 crore for FY20, but it could be a tad lower as we move forward,” Hero MotoCorp Chief Financial Officer Niranjan Gupta said. The company will recalibrate this overall estimate and decide on the new amount in the coming days, he added.

Earlier, this year, the company had announced that it has doubled its capex for the current financial year to Rs 1,500 crore to upgrade its portfolio to conform to BS-VI emission norms and for its upcoming plant in Andhra Pradesh.

Hero MotoCorp had earmarked a capex of Rs 700 crore in 2018-19. Commenting on the outlook for the rest of the current fiscal, Gupta said, “As things stand, we do see some improvement in the sentiment in the second half of the fiscal, which will be partially reflected during the festive season.”

There is also the anticipation of better participation from the rural markets in third and fourth quarters owing to good monsoon, he added. Besides, the company has also extended the credit period in order to support the dealers, he added.