Hero MotoCorp to invest Rs 5,000 crore in new plants, looks to also set up units in Europe and USA

In line with its ‘Vision 2020’ of increasing its cumulative production to 100 million units per annum, Hero MotoCorp has lined up investments to the tune of Rs 5,000 crore over the next  two years.

Of this proposed investment, Rs 1,050 crore has already been invested in its new manufacturing facility and global parts centre at Neemrana, Rajasthan, which has begun production and will be formally inaugurated by the state chief minister tomorrow.  The break-up of this investment in the new Green Concept Neemrana facility is: Rs 762 crore in the manufacturing lines and Rs 330 crore has been invested in the global parts centre.

Speaking at a media meet in Neemrana today, Pawan Munjal, vice-chairman and MD, Hero MotoCorp, said: “We have lined up a total investment of over Rs 5,000 crore worldwide including the manufacturing plants in Columbia and Bangladesh and the new plants coming up at Gujarat and Andhra Pradesh and the Hero Global Centre for research and design at Kukas in Rajasthan.”

Of the total investment, Rs 100 crore will be invested in the upcoming Bangladesh factory, Rs 200 crore in the Columbian plant, Rs 1,600 crore in the Andhra Pradesh facility, Rs 653 crore in the Kukas R&D centre and Rs 1,588 crore in the Halol Gujarat facility.

With an initial production capacity of 750,000 units, the Neemrana facility is currently producing 1,800 units daily; the company expects to achieve 2,500 units by the month-end. A walk around the Neemrana factory shows the HF Deluxe rolling out of the single assembly line; this 100cc commuter bike along with the HF Dawn is manufactured here. The Neemrana plant, however, can also manufacture higher-end and higher-higher capacity models like 250cc sport bikes.

Munjal said production of scooters will also commence soon with machining work already in progress. Scooters are expected to roll out in January 2015 with 500 scooters to be produced daily, taking the current capacity of 75,000 units up to 100,000 units a month. Currently 100cc engines are also being produced at Neemrana and later 250cc engines for the sports motorcycles will also be made by next October. The engine line at Neemrana also has a capacity of 2,500 units with the Rajasthan plant having manpower of 1,400 people.

Hero MotoCorp plans to double its parts business turnover to Rs 3,000 crore in 2-3 years.

Meanwhile, construction work on the Columbian facility in South America has begun. “We have plans to invest in Argentina in the next one year and in Brazil in 2016. We have started distribution of products in Peru of lower-displacement motorcycles as well as in Central America and will introduce higher-capacity products next year. The Columbian factory will have a production capacity of 150,000 units and will service the local market and neighbouring countries,” said Munjal.

“The new facility in Bangladesh that will also have a capacity of 150,000 units (which will produce 100cc, 125cc motorcycles and scooters like the Pleasure and Maestro) and will cater to the local market and neighbouring markets of Nepal, Myanmar and Indian states,” added Munjal. Products from this facility will also find their way to the north-eastern states of India as Hero does not have any production unit in the eastern part of the country.

The construction of the Bangladesh factory will start soon with work on the Halol, Gujarat, plant to kick off in November as the company has received the go-ahead from the state government. This would be followed soon with construction activity at the Andhra Pradesh site. “We will not wait for the Gujarat plant to be completed. The same green concept at Neemrana will be carried forward in the new facilities.”

Munjal also spoke about plans to enter the US and European markets: “We are looking at an assembly plant by end-2015 in Europe and will enter the US by 2016 when homologation is over. We currently showcased our products in Florida and received an encouraging response.” Hero’s hybrid Leap scooter, displayed at the Auto Expo in New Delhi earlier this year, will be sold in western Europe.