Hero Honda is a joint venture between Honda Corporation, Japan and the Mumjal family with both parties owning 26% each. Hero Honda has made its strong presence in the rural India and so it is able to withstand against the market competition. Selling of deluxe models of the bikes and a decline in raw – material prices has brought an improvement in the EBITDA margin level, in the financial year 2008. The dealership network of Hero Honda is strong and it also has a good penetration effect in the rural areas. The company has manufactured 46,000 units in Haridwar plant and its daily production has reached between 1000 to 1200 units on a daily basis.
Recently, Hero Honda reported an impressive July sales at 281317. The PAT growth was driven by low tax provision at 22.2% verses estimated 29.5%. The EBITDA is at Rs. 3.4B (verses estimation of Rs. 4.2B), which is due to lower realization growth and higher other expenditure. There are few banks which are likely to reduce auto loan interest rate at 1 to 2%. In the coming month, Hero Honda is expected to do better sales volumes on account of better monsoon and growth in the rural area.