Hero to invest Rs 5k-cr for global footprint

New Delhi: India's largest two-wheeler manufacturer, Hero MotoCorp, is looking at investing Rs 5,000 crore in five manufacturing facilities across India, Colombia and Bangladesh, to increase its annual production capacity to 12 million units by 2020.

The company, which will formally inaugurate its manufacturing facility in Neemrana in Rajasthan on Tuesday, is looking at commencing construction in Gujarat by November this year. Hero MotoCorp has also firmed up plans to set up its sixth unit in Andhra Pradesh - work on which will also commence shortly.

Pawan Munjal, vice-chairman and managing director, said: "We have lined up total investment of over Rs 5,000 crore across the globe including manufacturing plants in Colombia and Bangladesh, the new plants coming up in Gujarat and Andhra Pradesh and the Hero Global Centre for Research and Design at Kukas in Rajasthan."

The company invested Rs 1,050 crore at the Neemrana facility and has also started work on the Colombia plant. The Neemrana facility has an an annual capacity of 750,000 units and will produce the company's range of motorcycles and scooters.Going forward, the company has plans to manufacture high-end two wheelers from this facility. With the coming up of the Neemrana unit, the total production capacity of the company has increased to 7.65 million units per annum. Work on the Bangladesh facility will also begin soon.

Munjal added: "By November, we will start work on the Halol plant in Gujarat that will be followed very soon at the Andhra Pradesh plant. We won't wait for the Gujarat plant to come up for setting up the plant in Andhra Pradesh."

The manufacturing unit in Gujarat will have an annual capacity of 1.8 million units, while the Colombia and Bangladesh will roll out 150,000 units each annually.

The plant at Andhra Pradesh will also have an annual capacity of 1.8-2 million units. Overall, Hero MotoCorp aims at setting up 20 manufacturing and assembly facilities across the world to up its production capacity to 12 million units per annum over the next five years.

The company has earmarked investments of Rs 653 crore at Kukas, Rs 1,600 crore each at the Andhra Pradesh and Gujarat units, Rs 200 crore in Colombia and Rs 100 crore on the Bangladesh facility.

Munjal said: "The Bangladesh plant will be used to cater to domestic demand as well as cater to neighbouring countries such as Myanmar and may also even supply to the neighbouring Indian states from there."

To expand its global footprint, Hero MotoCorp is also looking at entering the European market with hybrid scooter Leap by the end of 2015. The company is in the process of getting approval for its products for the US market, where it plans to launch Hero products in 2016. As regards the domestic market, Munjal said the company is targeting to achieve 50 per cent market share. He, however, declined to provide a time frame for reaching the 50 per cent market share in the domestic market.

To strengthen its product portfolio, the company will launch two scooters and an engine for motorcycle (currently under development) next year. "By the end of the second quarter of 2015, the company is looking to launch a higher cc bike in the 250cc and above category," Munjal said.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.