Hero to set up new plants

The country’s largest two-wheeler manufacturer, Hero MotoCorp, has announced an investment of over Rs 2,500 crore in expanding capacity at its existing plants, setting up two new plants (one at Neemrana in Rajasthan and the other in Gujarat) and an integrated technology and R&D centre at Kukas in Jaipur.

The company will make an initial investment of Rs 400 crore in the Neemrana plant, its fourth plant in India. Construction of the new unit is to commence soon and it is slated to be operational by the first quarter of FY 2014. The plant will have an installed capacity of 750,000 units per annum and will provide direct employment to over 1,000 people. 

Hero MotoCorp has also signed a state support agreement with the Gujarat government to set up a new plant in the state; the specific location is as yet not disclosed. It will become operational by the second quarter of FY 2014 and will see an investment of Rs 1,100 crore. While the installed capacity of this plant will be 1.2 million units per annum, the second phase will see this number rise to 1.8 million units. The unit will provide direct employment to over 2,000 people. This is the second new plant announcement in Gujarat in a couple of days; on June 2, Maruti Suzuki had announced that it plans to set up its all-new unit in Mehsana.

For Hero MotoCorp, the two new plants will help augment its total installed capacity to nine million units in two years, which is in line with the company’s objective of reaching 10 million units in the next five years. The two-wheeler manufacturer currently has a total installed capacity of 6.15 million units in its three plants at Haridwar (Uttarakhand), Dharuhera and Gurgaon (Haryana). The company will also invest Rs 500 crore in expanding existing capacity, mainly at the Haridwar plant. 

After its split with Honda on December 16, 2010, Hero MotoCorp has been pushing for technology development and upgradation and the plan to set up the R&D centre is clearly a move in that direction. The research unit, which will be spread over 250 acres, will be the largest two-wheeler R&D centre in the country. Hero MotoCorp plans to invest Rs 400 crore in the facility which will involve 500 engineers. 

On the sales front, despite the sluggish market sentiment, Hero MotoCorp notched sales of 556,644 motorcycles and scooters in May 2012. It opened fiscal 2012-13 with sales of 551,557 units in April 2012. The company management has forecast growth of 9-10 percent for FY13 with volumes of 6.8 million units.