Hero Honda lines up Rs 1,900 cr for Haridwar

The largest two-wheeler producer of the world, Hero Honda Motors Ltd, along with its ancillary companies, will invest Rs 1,900 crore in the next three-four years in setting up a manufacturing facility at Haridwar in Uttaranchal.

In the first phase of the investment, the company will fork out Rs 400 crore to make its motorcycle unit operational by June next year, with an initial annual capacity of 500,000 units.

The company will invest Rs 800 crore to expand the capacity of its upcoming plant, while the remaining Rs 1,100 crore will be pitched in by its ancillaries.

Pawan Munjal, managing director, Hero Honda Ltd, said: "This will be the turn out to be the foremost manufacturing facility in few years. Besides producing our best-selling models like Splendor+ and Passion+ we will also roll out our future models, currently under R& D. The plant production will also form a sizeable chunk of our exports in future."

The capacity will be further scaled up to 1 million units. The two-wheeler major's upcoming factory premise will accommodate around 12 suppliers also.

To make the supply chain stronger, Hero Corporate Services Ltd, a subsidiary of the Hero Group, will develop two industrial parks around the facility. The company has already acquired 250 acres of land for each park.

At present, the combined capacity of the company's plants (other plants are at Dharuhera and Gurgaon) is 3 million units. Hero Honda will enhance the capacity of its existing manufacturing units to 4.4 million units by mid-2007 and 5.4 million units by 2010.

Arch rival Bajaj Auto has already announced plans to set up a manufacturing unit at Pantnagar in Uttaranchal, with an investment of Rs 1050 crore. TVS Motors is also setting up a plant in neighbouring Himachal Pradesh.

In the face of stiff competition, Hero Honda is also planning to make revamp its products. It is also considering giving a new outlook to its showrooms and will shape the entire dealerships on a single format across the country.

Pawan Munjal, CEO, Hero Honda Hero Honda Motors Ltd, said, "There is intense competition in the two-wheeler segment. To bring a new identity to our brands, our over 2500 dealerships and service network will wear a brand new look. The investment will be made both by the dealers and us. We will also be looking at new markets in South East Asia besides, Sri Lanka and Latin America."