Hero Honda Motors Ltd today said it has earmarked up to Rs 800 crore as capital expenditure for 2011-12 financial year that will include the cost for setting up its fourth plant.
The company also said it expects sales to touch a total of 6 million units during this fiscal, up from 5.4 million units it had clocked in 2010-11.
"For this fiscal, the capex will be around Rs 600 crore to Rs 800 crore and the majority of that will be for setting up of our fourth plant," Hero Honda Motors Ltd (HHML) Chief Financial Officer Ravi Sud told PTI.
The investments on the new plant will come through mostly during this fiscal itself, he added.
The company said it will soon finalise the location for its fourth plant, to add to the existing facilities at Dharuhera and Gurgaon in Haryana, and Haridwar in Uttarakhand, which have also been expanded.
As on April 2011, the company's total production capacity stood at 6.15 million units per annum as against 5.4 million units in the same month last year. In the last fiscal, the company had a capex of Rs 300 crore, which were mainly utilised in hiking the capacity.
"We want to take a well-considered decision on our new plant, and hence we are not hurrying into it. We are almost at the final stage, having shortlisted a few locations. We will soon be taking a final call on this," HHML Managing Director and CEO Pawan Munjal said.
On the sales front, HHML Senior Vice-President (Marketing and Sales) Anil Dua said the company is targetting a total of 6 million units in the ongoing fiscal.
"Last fiscal, we set a target of 5 million units and we ended at 5.4 million units. This year, we expect sales momentum to continue and are targetting 6 million units and let's see where we end," he said.
The company, which earlier had restrictions on exports, can now sell its products in the overseas markets after the exit of its erstwhile promoter Honda from it.
Out of a total of Rs 2,479.33 crore paid to Honda as licence fee, Hero Honda is paying Rs 550.96 crore as licence for exports.
"We have a clear roadmap in front of us -- the long-term vision that we want to achieve -- be it in our global foray or in technological excellence or in our marketing and communication initiatives.
"We are also exploring market opportunities in several parts of the world through a dedicated cross-functional team that has been set up for this purpose," Munjal said.
HHML is also building up its own R&D capabilities in terms of both manpower and logistics, he added.