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

Hero MotoCorp Ltd. | Automobile Two & Three Wheelers | Automobiles | BSE: 500182 | NSE: HEROMOTOCO

07 Mar 2012 Evaluate

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. Chosen because of the proximity to ports, the location is a 300-acre plot close to General Motors' car plant in Halol, Central Gujarat. The plant will get to levels as Haridwar plant's 2.5 million unit annual capacity, but will have modular capacities.

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. 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.