When contacted by The Financial Express, Mr AP Gandhi, president, HMIL confirmed that prices would be hiked any time this month. He said that the move was long overdue as a manufacturer can absorb cost inflation only to a certain extent. Time has now come to pass it on to the customers. He put the quantum of hike at anywhere between three and four per cent.

Slowdown in growth notwithstanding, auto manufacturers are forced to contend with the steep increase in input costs. Weakening of the rupee against the dollar have made imports of various components costly. Steel prices have also been moving up both in the domestic and international markets and the recent increase in prices of petroleum products further ate into the margins.

So far, most manufacturers have shied away from the temptation to hike prices, fearing it will smother the already-sluggish growth witnessed by the industry. But with the cost side pressure continuing, some of them have decided to hike prices to protect their bottomline. Ford India is another player which has indicated a possible hike in prices from the New Year. For HMIL, the hike comes at a time when it has already surpassed the business plan for the calendar year 2000. It has so far sold over 85,000 cars this fiscal, against the target of 78,000 units. HMIL has posted a net profit of Rs 59.34 crore in the very first full year of operations. Its turnover during the fiscal 1999-2000 was Rs 2,313.79 crore, depreciation Rs 113.61 crore and profit before tax Rs 67.61 crore. HMIL has three Santro variants: LE, LS (zip drive) and GS which at cost between Rs 3.23 lakh and Rs 3.88 lakh (ex-showroom Chennai) while Accent is available between Rs 5.55 lakh and Rs 6.62 lakh.