Hero MotoCorp to invest Rs2,575 crore in new plants, R&D centre
MDT/PTI 04 June 2012

After ending its 26-year-old successful joint venture with Honda, the Munjal-family now want to pump more money into Hero MotoCorp for increasing production capacity, with an eye on R&D as well

New Delhi: Hero MotoCorp, India's largest two-wheeler maker on Monday said it will invest Rs2,575 crore to set up two new manufacturing plants in Gujarat and Rajastan and a research and development (R&D) centre by 2013-14, reports PTI.

"We have huge investment plans in various parts of the organisation. We will be setting up our fourth plant at Neemrana in Rajasthan," Hero MotoCorp managing director and chief executive officer Pawan Munjal told reporters.

The company will invest Rs400 crore for the Neemrana plant, which will have an installed capacity of 7.5 lakh units per annum. This plant will be commissioned in the first quarter of FY14, he added.

The fifth plant will be set up in Gujarat with an investment of Rs1,100 crore. This will have a capacity of 1.2 million units, he said, adding that the plant would be commissioned by the second quarter of 2013-14.

"Once the fourth and fifth plants are commissioned, our total manufacturing capacity will be over 9 million units a year from the current about 7 million units," Munjal said.

He added that the company will be setting up a research and development (R&D) centre with an investment of Rs400 crore at a 250-acre location near Jaipur in Rajasthan.

At present, the company produces 70 lakh units annually from its three manufacturing plants at Dharuhera and Gurgaon in Haryana, and Haridwar in Uttarakhand.

At present, the company is in the process of investing Rs500 crore in capacity expansion of existing plants. It has also earmarked Rs175 crore for various other investments.

Last year in August, while announcing its new brand identity in London, the company had said it would set up two new manufacturing plants in the country.

The company had said it is looking at $10 billion turnover in the next five years and sales of 10 million units with exports to be about 10% of its total sales.

In terms of investment, the company had said it would pump in more investments in the next five years than it had done in the its 27 years of association with Honda, in the erstwhile Hero Honda joint venture that stood at over $1 billion.

In December 2010, the Indian promoter of the company, the BM Munjal family had agreed to buyout the entire 26% stake of Honda in Hero Honda for Rs3,841.83 crore. It brought an end to a 26-year-old successful joint venture.

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