Hero MotoCorp has 1.5 lakh units of unsold BS IV inventory, to offer 10000 to 15000 discount on BS IV vehicles

MUMBAI: Hero MotoCorp holds about Rs 600 crore worth of BS-IV inventory, and these vehicles will either be sold overseas where more stringent emission norms are yet to be put in place or used for its parts business by the country’s largest two-wheeler maker.

In another significant move, the company relaxed its stance on the ‘Force Majeure’ clause of deferring payments, by resolving to reimburse 50% of the dues of large vendors from its earlier plan to pay only 25%.

The company told analysts that the unsold stock totals about 1.5 lakh units. With the Supreme Court allowing 10% of unsold inventory to be registered, Hero MotoCorp will be offering discounts of Rs 10,000 on a motorcycle and about Rs 15,000 on a scooter to clear inventory that remains unsold. The company will be utilising the online platform to liquidate stock, given the fact that showrooms are shut.

Hero MotoCorp had organised the call to update the fraternity on the uncertain market conditions. The company stated that the situation is ‘constantly evolving’ and that it is difficult to predict the bottom of the cycle.

A business continuity plan is being worked on to reduce the severity of the issue. The company expects the two-wheeler industry demand to improve only by the festive season – that too supported by government stimulus and pent-up demand.

Hero MotoCorp assured that the company will continue its effort on new product development but will prioritize CAPEX, given the environment.

The company said small vendors or MSMEs are being paid on time and others too on a periodical basis. The company has already paid contractual labour in advance and no one is sacked. The management said GST deferral and EMI deferral will help in managing liquidity in the current environment.

READ  What's behind the sudden surge in demand for warehouse capacity?

The company assured that it has about Rs 4500 crore of liquidity and reserves, which is much more than that for any future payment obligation.

Hero MotoCorp currently has one month of BS6 inventory and because of adoption of fuel injection technology, the vehicle price has been increased by up to Rs 8,000.



Please enter your comment!
Please enter your name here