Hero MotoCorp’s first overseas plant to come up in Bangladesh

In line with its aggressive overseas market gameplan to have a footprint in 50 countries by the year 2020, Hero MotoCorp has launched operations in neighbouring Bangladesh through a joint venture with the local Nitol Niloy Group. It has also revealed plans to set up a 150,000 unit capacity manufacturing plant there, its first in a foreign country.

While Hero will hold the majority 55 percent stake, the Nitol Niloy Group will hold the rest. The equity investment in a 55:45 ratio over two will be Rs 76 crore, the new venture will have a capex of Rs 140 crore in 2014-15 and a total investment of Rs 240 crore over the next five years.

At present, Hero MotoCorp will retail 11 products (10 bikes and one scooter) through the initial 50 retail outlets, all with a five-year warranty. They include the 100cc HF Dawn and HF Deluxe, Splendor+, Splendor Pro, Splendor iSmart, Passion Pro, the 125cc Super Splendor and Glamour, the 150cc Xtreme and Hunk, and the 100cc Pleasure scooter.

Inaugurating the first of the flagship Hero showrooms in Dhaka today, Pawan Munjal, MD and CEO, said: “The commencement of our operations in Bangladesh is a significant milestone in our strategic global expansion plans. In addition to being our first overseas JV, this is also where our first manufacturing plant outside of India will come up. Once operational by the second quarter of 2015-16, the plant will have an annual capacity of 150,000 units. We are aiming to have around 20 percent of market share here in the first year of our operation.”

Since 2011, following its split with Honda Motor Co, Hero MotoCorp has consciously gone about expanding its global presence. As present, Hero two-wheelers are sold in 18 countries including Peru and Ecuador in South America; Guatemala, Honduras, El Salvador in Central America; Kenya, Mozambique, Tanzania and Uganda in East Africa; Burkina Faso, Ivory Coast, Congo and Angola in West Africa and most recently Turkey and Egypt. The company has also established international assembly units in Kenya, Tanzania and Uganda in East Africa through its distributors.

In India, Hero MotoCorp has three manufacturing plants – two in Haryana and another in Uttarakhand. While a fourth plant, at Neemrana in Rajasthan, is to be commissioned soon, taking its total annual installed capacity to over 7.5 million units, the fifth plant is being constructed in Gujarat.

In FY2013-14, Hero MotoCorp sold 6.15 million units in the domestic market, recording 3.43 percent growth year on year. On the export front, it shipped 130,763 units, down 11.53 percent, as per SIAM industry data.