Hero MotoCorp to invest Rs 1,200 cr in Gujarat plant

Hero MotoCorp is expected to announce plans to set up its fourth plant in Gujarat in March itself, even as talks speed up for a fifth facility likely at Karnataka.

Apart from feeding growing local demand, additional capacity would help the two-wheeler market leader to meet its $1 billion export target by 2020.

In a deal that has already been “finalised with the Gujarat Government,” the company is likely to invest about Rs 1,200 crore for a two-million-unit capacity plant set up over two phases, sources close to the development said.

Chosen because of the proximity to ports, the location is a 300-acre plot close to General Motors' car plant in Halol, Central Gujarat.

“Within this month, I should be making the announcement for the new plant,” Mr Pawan Munjal, Managing Director & CEO of Hero MotoCorp, told Business Line. “It will get to those levels (as Haridwar plant's 2.5 million unit annual capacity), but will have modular capacities.”

Catering to South
For the fifth plant expected to focus on the south Indian market, a 500-acre plot near Tata Motors' plant at Dharwad, Karnataka, has been offered by the Karnataka Government, State officials said.

This comes after months of discussions that company officials reportedly held with many States such as Tamil Nadu, Rajasthan and Himachal Pradesh.

While the fresh capacity is expected to come only by about 2014 – the same time when Hero's first self-developed models are launched, the company is also expanding yearly production beyond seven million units at existing plants in Haridwar, Gurgaon and Dharuhera. This will help it stay ahead of the Indian two-wheeler industry, which is set to grow at a CAGR of 14 per cent over the next five years.

“Some investments are being made at existing plants, so capacity should go up to over 7.4 million units in the existing operations. We're also working on a centre for after markets parts,” Mr Munjal said.