Mumbai: Honda Cars India has posted a loss for the next consecutive 12 months, hurt by a fall in profits on account of Covid-19, price on worker separation and accelerated depreciation charges.
The local passenger automobile unit of Japan’s Honda Motor registered a web loss of Rs 1,588 crore for the fiscal 12 months ended March 31, 2021, in accordance to its submitting with the Ministry of Corporate Affairs, shared with ET by company investigate system Tofler. In the past fiscal 2020, the producer of the Honda Metropolis had posted a web loss of Rs 1,680 crore.
Earnings in fiscal 2021 fell by over eleven% to Rs 9,624 crore. The firm took a Rs 463 crore cost on the voluntary separation plan provided to workers at its Greater Noida plant, which has been shut down. Accelerated depreciation was Rs 587 crore.
In the past 5 several years, the firm has posted a loss in 3 — besides FY20 and FY21, it posted a Rs 2,272 crore loss in FY17. The accumulated losses have been transferred to the balance sheet.
Honda Cars India’s earnings in FY21 was about fourteen% of sector chief Maruti Suzuki’s and about 5% of the earnings in the passenger automobile industry.
When contacted, a Honda Cars India spokesperson stated: “As a coverage, the firm does not comment on financials.”
With consolidation of its manufacturing footprint to one facility in Rajasthan right after the closure of the Greater Noida plant last 12 months, Honda needs to arrive again to the progress trajectory, but not at the price of income.
Honda Cars India had advised ET previously that potential utilisation at the Tapukara, Rajasthan, plant was anticipated to enhance to 70% in the ongoing financial 12 months, up from thirty% in FY21. The firm also expects to make a income this fiscal 12 months ending March 2022.
In a latest interview to ET, Honda Cars India chief government Gaku Nakanishi stated: “The priority is not to turn into large, but a reliable, company and adaptable firm. We were being in crimson last 12 months (FY21). But this 12 months (FY22), we will be financially rewarding.”
In fiscal 2021, when the industry quantity declined 2.2%, the company’s profits fell by a fifth to eighty two,074 units. In accordance to its manufacturing approach shared with component suppliers, Honda Cars India is now eyeing once-a-year volumes of a hundred and twenty,000-one hundred twenty five,000 units, which is even now only extra than 50 percent of the peak volumes it had shipped four-5 several years in the past.
In simple fact, the company’s FY21 profits were being the most affordable due to the fact FY13. In the last 5 several years, its quantity has shrunk over fifteen% even though the industry has remained continual. For that reason, its sector share dropped to 3% in FY21 from a peak of 7% in FY16.
The firm was in a position to control worker price and other charges in the challenging 12 months of FY21, but the worker separation price and accelerated depreciation charges hurt the performance.
Bigger preset price per unit due to decrease manufacturing also weighed on the margin. Functioning margin dropped to .84% in FY21 from the past 3-12 months common of 5.83%. Ebitda per car sold dropped to Rs 9,580 from Rs 61,665 in FY19.
In accordance to the firm, it has witnessed greater-than-anticipated restoration in the local sector post the next wave of the pandemic and is expecting profits to increase in double-digits in the ongoing financial 12 months.
“We had anticipated the sector to just take 3-four months to normalise right after the next wave. In a excellent way, our forecast was completely wrong,” Nakanishi had stated for the duration of the interview.
Honda is also growing exports from India. Even though the firm exported 5,364 units in FY21, putting up progress of forty eight% 12 months on 12 months, with the addition of the Honda Metropolis checklist, the selection is probable to quadruple in FY22.