Hero Honda to decide on new plan in one month

The country’s largest two-wheeler manufacturer Hero Honda will take a final call on setting up the company's fourth plant in a month's time. Currently, Hero Honda has three manufacturing facilities at Dharuhera and Gurgaon in Haryana and at Haridwar in Uttarakhand.

Anil Dua, senior vice-president (marketing and sales) said, “The decision on the new plant will be finalised in a month or so.” Dua was speaking on the sidelines of the annual Siam conference on Thursday.

“We grew by 24% last year and we hope to close this year in double digit,” he said. The new plant for Hero Honda is meant for the company’s requirement in 2011. “We are on schedule to accomplish that,” he added.

The company also expects its sales in the current financial year to top 5 million units. This will be around 4,00,000 units more than what it sold last year. The company is also looking at launching five motorcycle models in the current fiscal.

The company recently said it planned to invest around Rs 115 crore to add 3,00,000 units a year capacity to its plant in Haridwar. The sales of motorcycles saw a 10% jump in the first quarter ended June 30, 2010. However, due to higher costs of raw material and money spent on meeting new emissions rules, Hero Honda saw a dip in its quarterly profit first time in the last three years. For the quarter ended June 30, 2010, the company posted a net profit of Rs 491.69 crore, down 1.65% compared to Rs 500.11 crore posted same quarter, a year ago.

Hero Honda, which makes close to half the motorcycles sold in the country, recently said that it believed that a further rate hike may take its own toll from the company. Ravi Sud, CFO, Hero Honda recently said that the demand will start to tumble in the second half of this year.