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Slowdown fails to put brakes on Hero's expansion

Co lays foundation for new plant in Rajasthan with 750,000 unit capacity per year

Swaraj Baggonkar  |  Mumbai 

The two per cent drop in sales not withstanding Hero MotoCorp, India's largest two wheeler maker today laid the foundation stone for a new plant in with a capacity of 750,000 units per year.

The new plant is one of the two plants planned by the company to enhance its production capacity to beyond 7 million per annum presently. With an announced target of 10 million units capacity in the next 3-5 years, the company will be adding another plant in the south of the country in the coming period.

The company will invest a total of Rs 550 crore in setting up the fourth manufacturing plant and the global parts center in Both the facilities are expected to be operational towards the end of the financial year 2013-14.

In the period April-December this year the company posted a 2% drop in domestic sales at 4.42 million units as compared to the same period last year as customers retracted under pressures like high inflation, high fuel costs and expensive loans.

Pawan Munjal, Managing Director & Chief Executive Officer, said, “The commencement of work on the new plant is clearly indicative of our intention and strategy for the future. Thanks to overwhelming demand for our products, we have been consistently clocking in excess of five lakh unit monthly sales on an average.

The Neemrana, Rajasthan-based plant, spread over an area of 47 acres, will provide direct employment to over 1000 people, and have an installed capacity of 750,000 units per annum, stated a release from the company.

Expressing optimism at the future Munjal added, "We foresee a revival in market sentiments sooner than later, and when it happens, we will be ready to meet the upsurge in demand." The global parts center, which is expected to be operational in the third quarter of the next financial year (2013-14), will initially employ 400 personnel.

The global parts center will have automated storage and retrieval system, automated packaging and sorting system, on-line tracking of parts through warehouse management system, lean manufacturing systems and green building concept.

First Published: Mon, January 14 2013. 16:46 IST