Hero Motors plans Rs 200 cr capacity hike

The Rs 260 crore Hero Motors, part of the Rs 7,800 crore Hero Group, will be investing Rs 200 crore during the current year to increase its production capacity. The company will be investing Rs 50 crore from its internal accruals and the remaining Rs 150 crore will be through a mix of debt and equity.

Hero Motors managing director Pankaj Munjal detailing these plans said: "We are stepping our capacities and also our association with Aprilia Group is expanding. We are launching three new models with their participation and we expect demand to pick up dramatically. To meet this demand, we will be investing Rs 200 crore. We are talking to three strategic investors to part-finance this funding and we should be signing the deal by July 2004. A part of the Rs 200 crore will also be through debt and Rs 50 crore will come from Hero Group."

Elaborating on the association with Aprilia Group Italy, Munjal said: "We have entered into a technical collaboration to manufacture high-end, high-powered and aggressive looking products. Aprilia is Europe's second largest producer of motorcycles and scooters and the only company to offer a complete range on two wheelers. Under the collaboration, with body technology from Aprilia we would be manufacturing 75/92 cc scooterettes, 125cc moto-scooters and 125cc scooters. These would be joint branded Hero-Aprilia and will be marketed in India by end of this calendar year."

Commenting on the other expansion plans, he said: "We are looking at auto part segments keenly, besides being already in the auto components. Once we are finalised with the funds by July, we will be aggressive in each of these segments."