Hero MotoCorp is expecting to save a whopping Rs 1,000 crore this financial year. The company is able to achieve this through margin transformation programming which is delivering really good results and the ammortised payments to former partner Honda coming to an end in June.
The Gurgaon-based manufacturer had started a margin transformation programme called leap in 2013 with a view to transform its margins over a four-year period. The programme looks at a wide gamut of areas, including pricing and feature optimisation, raw materials consolidation, outbound logistics, operational excellence and marketing expenditure, e-sourcing and product design. Through this programme, the company is aiming to double the savings this financial year that will directly result in a great profitable year. In addition, Hero MotoCorp will pay its last of the 14 instalments of the amortised payments to its previous partner Honda, in June this year.
"We accrued more than Rs 150 crore in the financial year 2013-14, which is going to increase progressively. We have already come to a stage where, effective April 1, 2014, the monthly accrual was Rs 25 crore. So, all other factors, such as volatility in commodity market and the currency fluctuation remaining constant, we expect over Rs 75 crore to be added to the bottom line per quarter in FY15," said Ravi Sud, senior vice-president & chief financial officer, Hero MotoCorp.
