India's largest two-wheeler maker Hero MotoCorp has earmarked Rs 1,000-1,200 crore as capital expenditure for the current financial year, according to the company’s Chief Executive Officer Niranjan Gupta.
“Last year, we spent around 2.2% of our revenue on Research and Development. We have been continuing on the uptrend in R&D spending. So, you can assume that our investment in R&D will continue to have the uptick as we continue to build the technology,” Gupta told investors.
The company’s management did not mention how it plans to spend the earmarked capital expenditure, but noted that there are plans to launch new products in the premium motorcycle, scooter, and electric vehicle segments this year.
“In the premium segment, last year we had a slew of new launches. The portfolio building will continue. We will have a couple of more models coming in this fiscal. The other thing will be the action on the scooters, it will be big on both the ICE and EV sides,” Gupta said.
Hero MotoCorp is doubling down on its electric vehicle business under the Vida brand, with a plan to expand its portfolio this year to four models from the current two offerings. One of the scooters is likely to be in the affordable range, while the other could be in the mid-segment.
Meanwhile, Hero MotoCorp believes that with the recently launched Xtreme 125R, the 125cc motorcycle segment will be a key point of demand during the upcoming festival season.
It plans to ramp up the capacity of the recently launched Xtreme 125R motorcycle. The model currently has a capacity of 25,000 units per month, which the company targets to expand to 40,000 units in the next couple of months.
“We have three strong models in 125cc - Glamour, Super Splendor and Xtreme 125. The 125cc segment portfolio is pretty strong. The action there is to ramp up capacity and continue increasing market share every quarter,” Gupta said.
Last year, the company launched a refreshed model of Passion in the 100-110 cc segment, which helped the company maintain its market share in the entry-level segment.
Earlier this year, Hero MotoCorp announced its plans to spend up to Rs 600 crore by 2025-25 to set up a Global Parts Centre in Tirupati, Andhra Pradesh. Currently, it has one such parts centre in Neemrana, Rajasthan with a storage capacity of up to 26,000 SKUs and the capacity there is fully utilitsed.
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