Hero Honda to invest Rs 150 crore
Press Trust of India
HARIDWAR, April 8: The country's largest two-wheeler maker Hero Honda will invest an additional Rs 150 crore in the current financial year to scale up the capacity of its facility here that was inaugurated today. The plant would have an initial installed capacity of half a million bikes per year and the company would increase it to a million units by 2008.
The company has so far invested Rs 450 crore in the plant. It had last year announced that along with its ancillaries, a total investment of Rs 1,900 crore would be made in the project, which would have an overall production of 1.5 million units by 2010.
Hero Honda had completed the construction of the plant last year but delayed the operations to avail the full 10-year tax holiday from the Uttarakhand government.
The new plant would now enjoy tax holidays, which include zero excise duty for 10 years, no income tax for first five years and 30 per cent rebate in the following five years.
“The fiscal incentives will impact the overall bottom-line of the company positively,” Hero Honda Motors Ltd managing director, Mr Pawan Munjal said here, adding that this would help the company counter the tremendous pressure created by increasing input prices.
He said the company wanted to gain maximum advantage from the new plant and would maximise production in the next three years to touch a capacity of 1.5 million units.
Asked if the company was planning to pass on the excise benefits to the buyers of vehicles produced at the Haridwar plant, where it would manufacture its high volume model 'Splendor' initially, followed by 'Passion plus', he said: “We will review all our options keeping in mind the rising commodity prices as well.”
The initial production level of the new plant would be 2,000 vehicles per day, which would be ramped up to 4,000 units a day by the end of this year, Mr Munjal added.
In the next two years, 100 ancillary firms would be setting up their manufacturing base here. To begin with, 40 ancillaries would have their plants in the area.
“This plant sets new benchmark in terms of processes, lay-out, supply-chain management, human resource management and most importantly environmental consciousness,” Mr Munjal said.
He further said the company was undertaking a project called 'Samadhan' on how to re-utilise the available capacities at Manesar and Dharuhera facilities after the third plant coming in here.
The company currently has a production capacity of 3.9 million units from its two facilities at Manesar and Dharuhera in Haryana.
The Hero Honda managing director said the company sold 33.3 lakh units in the last fiscal at a time when the two-wheeler market was declining.
“We maintain our sales at the same level of the previous year, which helped in increasing our market share. We are looking at maintaining this strength,” he added.
Earlier in January, the company had announced to launch as many as 12 new products in the next 18 months.
