Hero on new tech hunt

Ties up with Austria’s AVL & UK’s Ricardo for independent model development capabilities

After parting ways with Honda, Hero MotoCorp is set to firm up technology alliances with overseas firms like Austria-based AVL and UK-based Ricardo to create independent model development capabilities.

“To develop our own capabilities, we are tying up with some international companies like AVL or Ricardo. We are in the final stages of tying up for new platforms and engines,” Ravi Sud, chief financial officer, Hero MotoCorp, told analysts on a post-earnings call on Friday.

Austria-based AVL (Anstalt für Verbrennung skraftmaschinen List) is one of the largest privately owned firms specialising in powertrain engineering. Britain’s Ricardo, a global provider of product innovation, engineering solutions, clean technology and strategic consulting is publicly listed on the London stock exchange. AVL and Ricardo are both already present in India with head offices in New Delhi.

The world’s largest two-wheeler maker by volumes is open to forming multiple technology alliances or joint ventures for engines and platforms as well as acquiring design houses. Sud revealed that the company has been sprucing up its own research and development (R&D) capabilities this financial year by adding 80 more engineers. Total R&D strength of the company stands at 255 engineers and is set to go up further as it prepares to go solo sans Honda’s help by 2017.

Hero MotoCorp proposes to roll out its first self-developed two-wheeler in the next two to two-and-a-half years. “We are pretty sure that in about three-to-three-and-a-half years from the day we separated, we should be able to launch our own products,” Sud said. Munjals-promoted Hero and Honda Motor parted ways in December 2010.

Anil Dua, senior vice-president (marketing and sales), Hero MotoCorp, pointed out that Hero MotoCorp would continue to improvise its core product portfolio comprising Splendor, Passion, Karizma and Pleasure with new features through its own capabilities after the split. In immediate term, the company plans to raise overall production to seven million units annually by the end of March 2012, Dua said. The company currently has an overall capacity of 6.2 million units at its plants in Gurgaon, Dharuhera and Haridwar.

“We expect our sales to grow 11 to 13 per cent during 2012-13,” Dua said. The company aims to sell in excess of six million units during 2011-12. While the growth is coming from both rural and urban areas for the company, Dua said about a fourth of new two-wheeler purchases taking place in the country were replacement sales. The company plans to grow its distribution network to over 5,000 touch points by end of current fiscal. Dua said ‘most’ of the 5,000 touch points include sales points but all these touch points already have service stations.

As regards exports, the company will start exploring new markets like Africa, North America and South East Asia. “These will be distributor-led markets. A distributor will manage about 100 sales points. These dealerships will sell all other brands for example Honda as well as Hero,” Dua said. Meanwhile, with planned launch of new scooter Impulse, the company has raised scooter production levels to 50,000 per month. Shares of Hero MotoCorp rose three per cent to close at Rs 1,950 at close on Bombay stock exchange on Friday.