Hero forms joint venture in Bangladesh

Hero MotoCorp, India’s largest two-wheeler maker, has finalised a joint venture with Bangladesh-based Nitol Niloy Group to retail about a dozen two-wheeler brands in that country. Through the joint venture, Hero will set up its first manufacturing plant abroad. It is likely the facility will be operational in the second half of 2015-16.

Hero holds 55 per cent stake in the joint venture. It inaugurated its first showroom in Dhaka on Monday.

Through the next five years, Hero and Nitol Niloy will infuse $40 million (Rs 240 crore) into the venture. The plant will have an annual capacity of 150,000 units. Initially, at least 11 Hero motorcycle and scooter models will be marketed in Bangladesh, through 50 retail outlets.

BANGLA ENTRY

• Through a joint venture, Hero to set up its first plant abroad
• Plant likely to be operational in the second half of FY16
• Hero holds 55% stake in the joint venture
• Through the next five years, Hero and Bangladesh’s Nitol Niloy to infuse $40 million (Rs 240 crore) in the venture
• Plant to have annual capacity of 150,000 units
• Initially, at least 11 Hero motorcycle, scooter models to be marketed in Bangladesh, through 50 retail outlets

There will be total equity infusion of $12.6 million (Rs 77 crore) in a ratio of 55:45, through two years. In the first year, the new venture will record capital expenditure of $23.2 million (Rs 140 crore).

Pawan Munjal, managing director and chief executive, Hero MotoCorp, said, “The commencement of our operations in Bangladesh is a significant milestone in our strategic global expansion plans. We are aiming to have 20 per cent market share in the first year of operation.”

The expansion by Hero is part of its plans to expand to about 50 countries by 2020.

The Hero models on sale in Bangladesh are HF Dawn and HF Deluxe, Splendor+, Splendor Pro, Splendor iSmart, Passion Pro, Super Splendor, Glamour, Xtreme, Hunk and the scooter Pleasure.