Hero Honda dithers over third plant

Hero Honda Motors, the country's largest two-wheeler maker, said it may not set up the much talked about third plant in the near future as its demand-supply position was balanced at the moment.

"Our third plant will be set up at the right time. We are quite certain that we will be able to register a double digit sales growth by the end of 2003-04," Brijmohan Lall, chairman, Hero Honda, told reporters here.

The company has been talking about setting up a third plant in the country ever since demand for motorcycles started beating current supply positions.

But growth has tapered in the past several months and adding fresh capacities may not be a feasible option at the moment, an executive of the company explained.

Since late 2002, until when the two existing plants were running full steam owing to high demand, the company had said it may need to set up a new unit to bridge any demand supply gap.

But motorcycles sales have tapered since and is expected to grow around 15 per cent year-on-year instead of 25 per cent last year.

Lall said that Hero Honda has been continuously upgrading the existing plants in Haryana, and its production capacity has actually gone up from around 2.2 million units per annum to close to 2.4 million units per annum.

This capacity augmentation is enough to take care of the current growth in demand of around 15 per cent.

Munjal said Hero Honda will post a double digit growth in the current financial year, but declined to give a number.