Date:05/12/2006 URL: http://www.thehindubusinessline.com/2006/12/05/stories/2006120504501500.htm

Hero Honda: New moves unwelcome?

The stock of Hero Honda slipped 0.8 per cent in a flat market despite its recent launch of new versions of the CD Dawn and CD Deluxe motorcycle models. According to broking sources, though the new launches could drive up its sales growth, they could add pressure on the profit margins.

According to them, the company has launched both models with several improved features, which are likely to increase input costs. The company has kept the price of the CD Dawn almost unchanged. However, the other two-wheeler majors, Bajaj Auto and TVS Motor, closed on a firm note on Monday.

Hero Honda also announced its entry into the four-wheeled "passenger vehicle" segment. This could be a risky move considering the fact that company does not have requisite expertise, according to brokers. They said that this was an unrelated expansion that could potentially put pressure on the company's current revenue stream.

K.S. Badri Narayanan