HMSI to invest Rs 1,100 cr in new plant

Goes aggressive on rural market

Honda Motorcycle & Scooter India (HMSI) plans to set up a fourth plant in the country at Ahmedabad at an investment of Rs 1,100 crore, to increase annual capacity from 4.6 million to 5.8 million. The new plant to be operational in the second half of calendar year 2015 will largely look at meeting the rising demand for scooters, while catering to markets in western parts of the country.  

 

HMSI’s existing three plants - at Haryana, Rajasthan and Karnataka- cover the North and South markets. HMSI has been on an aggressive dealership and service network expansion drive over the last one year adding 700 outlets, taking its dealership count to 2,700 by end of financial year 2013-14. The plan is to add 500 more over the next fiscal year, majority of them in the rural areas.  Currently 30-35% of HMSI’s sales, pegged at around 3.7million come from the rural market, with bulk of sales coming from metro and tier I and II cities. “Going forward the focus over the next three-four years would be on the rural market,” Yadvinder Singh Guleria, operating head, sales & marketing, and vice president, HMSI told Business Standard. Though motorbikes in the 100 cc and 125 cc range would be the key driver in the rural markets, there is expected to be traction for scooters in many tier III markets, he added.

 

HMSI is expected to finish the current fiscal with sales of around 3.7 million as against 2.75 million in 2012-13. It is expected to grow its topline by 50% in the current fiscal from around Rs 10,000 crore in FY 13 to Rs 15,700 crore in FY 14, company executives said. HMSI currently has nine bike and five scooter models in its portfolio. Even as the two-wheeler segment grew 5.5% in the last one year, industry expects market to clip along at 7-9% over the next five years.