Hero MotoCorp to invest heavily on long-term growth and expansion

Looking to quickly establish itself as an independent and fiercely ambitious mass market two-wheeler company HeroMotor Corp (HMCL) already set the ball rolling with the recent announcement of its alliance with Erik Buell Racing (EBR) for major R&D initiatives that include developing a concept hybrid scooter among other long-term technological advances.

With the blueprints for future growth and prosperity made visible, the country’s largest two-wheeler manufacturer is now talking names and numbers and has clearly chalked out an elaborate plan in order to achieve maximum share in the country’s rapidly expanding two-wheeler market.

Unveiling a slew of strategic initiatives to move towards its vision of capturing the future potential of this price and efficiency focused two-wheeler market, Pawan Munjal, Managing Director and Chief Executive Officer, HeroMotor Corp Ltd said, “We have been moving with great speed towards giving shape to the vision that I outlined at the launch of our new brand identity in London less than a year back.” 

Munjal went on to propose on behalf of the company that it will in fact invest over Rs 2,500 crore in setting up two new plants, expanding the capacity of its existing plants and setting up a state-of-the art Technology/R&D centre spread over 250 acres at Kukas, Jaipur in Rajasthan.

For the first of the two new proposed production facilities, HMCL will be making an initial investment of Rs 400crore to completely set it up at Neemrana in Rajasthan. Construction of the plant will commence soon, and should be up and running by the first quarter of 2014. The plant will employ over a 1,000 personnel and and will have an installed capacity of 750,000 units per annum. 

The second of the two plants in the long-term investment pipeline will witness birth in Gujarat, courtesy a State Support Agreement (SSA) sanctioned by the state government. Expected to come alive in the quarter following the start of its Neemrana plant operations, the plant in Gujarat will have a total installed capacity of 1.2 million per annum with the potential to 1.8 million in the subsequent phase. The plant in Gujarat will employ over 2,000 people. 

The two new plants, will be built ground up and together account for five dedicated production facilities for the indigenous bike maker’s operations in India alone. With this expansion the total installed capacity of the company would be touching more than nine million units in two years time, bringing its closer to ultimately achieving its dream production figure of 10 million units in the next five years.

Playing a major role in realizing this ambitious long-term goal for HeroMotor Corp will be a separate state-of-the art integrated R&D centre at Kukas, for which the company has allotted an initial investment of Rs 400 crore.  Spread over of a 250 acre campus, this research and technology focused structure is to become the country’s largest two-wheeler R&D set-up and will employ a total of 500 engineers.

Seeing the untapped production potential of its three existing facilities located at Dharuhera, Gurgaon and Haridwar (Uttarakhand), the two wheeler giant also announced a substantial investment of Rs 500 crore for expanding operations and ramping up their current production capacities.

The news gets even better for personal investors in the company’s future, as it has now approved a proposal to merge Hero Investment Private Ltd. (HIPL), the investment arm of the Hero Group, into Hero HMCL.