Hero Honda to set up new plant in Uttaranchal

Hero Honda today announced a new plant in tax-haven Uttaranchal, where the auto major will invest Rs 1,900 crore along with ancillaries. The plant will be operational by May 2007.

The company, which currently has two plants in Haryana, said the Uttaranchal plant would start with an initial capacity of 5,00,000 units to be scaled up to 15 lakh by the year 2010.

The Hero Honda plant and its main ancillaries would be located on a 275-acre plot in the Integrated Industrial Estate in Haridwar, being developed by State Industrial Development Corporation of Uttaranchal Ltd. The company will start at an initial investment of around Rs 300 crore.

The new plant will help it achieve an annual production capacity of 44 lakh units by May 2007. It is already expanding capacity at existing plants at Gurgaon and Dharuhera by an additional 9,00,000 units, that will be completed this month.

Interestingly, the Uttaranchal plant of Hero Honda seems to be getting primacy over a proposed plant at Jaipur, where the company is facing problems.

Hero Honda will be the second major bike company, after Bajaj Auto, to set up business in the hill state that offers 100% excise exemption for 10 years and 100% income tax exemption for the first 5 years and 30% for the next 5 years, among other benefits. Other auto companies that have entered the state include Tata Motors and Mahindra & Mahindra.

Pawan Munjal, MD of Hero Honda, said the company had an aggressive strategy of consolidating market leadership through growth in the domestic and export markets.