Hero MotoCorp to set up two new plants; unveils new brand

Hero MotoCorp to set up two new plants; unveils new brand

London: Announcing its new brand identity, India’s largest two-wheeler maker Hero MotoCorp (formerly Hero Honda) on Tuesday said it will set up two new manufacturing plants in the country and will pump in more investments in the next five years than it has done in the last 27 years with Honda.

The company, which on Tuesday introduced two new products under its new brand, said it will soon tie up with a European firm for technology support for its future product platforms.

“One of the plants will be in South India and will be announced soon. The other one will be in West India. We will be setting aside a war chest for our both domestic and global foray," Hero MotoCorp managing director and CEO Pawan Munjal told reporters here.

The company will also set up a global parts centre in Rajasthan, he added without giving any time-frame for the proposed facilities.

The firm had earlier planned to announce the details of the proposed fourth plant by last year but it got deferred due to its eventual break-up with the Japanese promoter Honda.

Last month the company had said it was looking at a capacity of 7.5 lakh units annually for its proposed fourth plant for which it would invest up to Rs550 crore.

Earlier, sources had said the company had shortlisted Gujarat and Karnataka for setting up the plant.

The company at present produces 61.5 lakh units from its three manufacturing plants at Dharuhera and Gurgaon in Haryana, and Haridwar in Uttarakhand.

Talking about the future investments, Munjal said: “The investment in the next five years will be more than what we made in the last 27 years with Honda".

While being in the JV, the company had invested over $1 billion in the last 27 years, he added.

When asked about the mode of investment, Munjal said: “It will be through internal accruals. If need be, we may look outside but we are comfortable with internal accruals".

In December last year, the Indian promoter of the firm, the B. M. Munjal family had agreed to buyout the entire 26% stake of Honda in Hero Honda for Rs3,841.83 crore. It brought an end to a 26-year-old successful joint venture.

On sales, Munjal said, “We are looking at $10 billion turnover in the next five years and sales of 10 million units. We expect exports to be about 10% of our total sales".

The company has already identified 30 countries in Latin America, South East Asia and Africa for exports, he added.

“We may start exports as soon as during next one to two quarters. Also, we may start with exports from India than setting up plants overseas which would serve as clusters to supply neighbouring markets," he said.

The company had reported a 13.62% decline in its net profit for 2010-11 at Rs1,927.90 crore, while the total income from operations increased by 22.32% to Rs19,401.15 crore.

The two-wheeler sales went up by 17.44% at 54,02,444 units in FY’11. It had earlier announced a sales target of 60 lakh units for this fiscal.

Munjal further said for technology support, Hero MotoCorp will tie up with an European firm soon, despite having a licence agreement with Honda till 2014.

“We are soon going to announce a tie up with an European firm for technology for future platform. We will also ramp up our own R&D and in the next five years, Hero MotoCorp will have a world class R&D centre," he added.

Last month, the company had said it would be hiring “hundreds" as it would look to develop its own technology. It is also open to acquire foreign firms to consolidated its position in the two-wheeler R&D space.

The company at present has some small R&D set up at its Gurgaon and Dharuhera facilities, where cosmetic changes of the products are being done so far.

Introducing its new brand, the company today launched a 110cc scooter ‘Maestro’ and 150cc off-road bike ‘Impulse´ under Hero brand for the first time.

The company has roped in cricketer Irfan Pathan and bollywood actor Ranbir Kapoor for the two products.

“The new brand identity has born out of our desire to break the shackles and realize our potential which were restricted by the nature of our JV with Honda," Munjal said.

The company would continue to sell its existing Hero Honda products.