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The joint venture, ZF Hero Chassis Systems, has been formed after acquisition of 50% stake in Hero Motors' Chassis Systems by the German company for an undisclosed sum
The Munjals-promoted component maker Hero Motors Ltd on Tuesday said that it has formed a joint venture (JV) with Germany's ZF-Lemforder and both the partners plan to invest Rs80 crore over the next couple of years to operationalise two facilities for manufacturing auto parts for four-wheelers, reports PTI.
The JV—ZF Hero Chassis Systems—has been formed after acquisition of 50% stake in Hero Motors' Chassis Systems by the German company for an undisclosed sum.
"We will invest Rs80 crore over the next two years to set up two new plants in Gurgaon and Chennai to cater to the northern and southern markets respectively," Hero Motors' managing director Pankaj Munjal told reporters.
He said that the investment for the plants will come from the JV’s internal accruals and debts.
The JV is starting with two Hero Motors' plants at Talegaon in Maharashtra and Halol in Gujarat with an annual installed capacity for assembling 1.6 lakh units of chassis and axle systems.
"The two new plants will take our total capacity to 4.5 lakh units. We will start with focus on the small-car segment and then diversify into bigger cars," Mr Munjal said, adding that the target customers will be domestic original equipment manufacturers (OEMs).
Hero Motors, a subsidiary of the $4.50-billion Hero Group, has already invested around Rs4.60 crore for the two plants in Halol and Talegaon since acquiring them from US-based component maker Delphi in 2008.
Hero Motors already supplies chassis systems to General Motors for its various models and Mr Munjal said talks are now on to win contracts from other OEMs like Suzuki and Tata Motors.
Hero Motors also operates a JV with Japanese firm Sumitomo and has a technology agreement with Magna.