Hero Honda looking to gain market share

ST. GALLEN, Switzerland (Reuters) - Hero Honda, India's largest motorcycle maker, is aiming for high single-digit percentage sales growth and is looking to keep its profitability momentum, its head told Reuters on Friday.

"We will try to grow at a high single-digit percentage rate in 2009/10," Chief Executive Pawan Munjal said in an interview on the sidelines of the St. Gallen symposium.

"As far as profitability is concerned, we hope to maintain the same momentum as we have seen in the 2008/09 year as long as raw material prices stay at the levels they are at now," Munjal said.

Sales of automobiles and motorbikes in India have been hit by a rise in interest rates, a squeeze on credit and a slowdown in the economy which put the brakes on customer demand.

But the group, in which Japan's Honda Motor Corp holds a 26 percent stake, is benefiting from increased sales in rural markets and smaller towns where consumers depend less on financing than in urban markets.

"The majority of India lives in rural areas and the government is pumping in a lot of through various programmes," Munjal said. "Hero is focusing a lot on rural markets. Going forward, a substantial industry growth is expected to come from these markets."

Hero Honda has nearly half of the two-wheeler market in India.