Honda's may invest Rs 1k cr in new 2-wheeler plant

Japanese auto giant Honda today said it will set up its third two-wheeler manufacturing facility of its Indian operations at Narsapuram in Karnataka.

While the firm has not specified the investment on the plant, it is understood that the company could be pumping in around Rs 1,000 crore on the facility that will have an installed capacity of 12 lakh units annually by 2013.

The company, which recently exited from India's largest two-wheeler maker Hero Honda, will also double the output of the upcoming second plant at Tapukara in Rajasthan to 12 lakh units by the end of this fiscal.

"In order to realise Honda's vision to provide good products with speed and affordability, the third plant will be built in the Bangalore area in the southern part of India.

"The third plant is scheduled to become operational in the first half of 2013, with annual production capacity of 12 lakh units," the company said in a statement.

According to sources in the know of the development the company is likely to invest an additional Rs 1,000 crore on the third plant and another Rs 500 crore for doubling of capacity at the second facility.

The company's wholly-owned subsidiary, Honda Motorcycle & Scooter India (HMSI), is currently investing about Rs 500 crore for setting up its second facility at Tapukara in Rajasthan and it will be inaugurated on June 1 with an initial installed capacity of 6 lakh units per annum.

"HMSI decided to double the annual production capacity of this plant to 12 lakh units in March, 2012," the company said.

Post this expansion exercises, HMSI's total installed capacity will be increased to 40 lakh units annually by 2013 from 16 lakh units at present.

"India represents the world's second largest motorcycle market behind only China, and industry-wide motorcycle sales in India for 2010 reached 1.13 crore units (up 30% compared to 2009).

"HMSI's sales have grown steadily with 2010 sales of approximately 15.26 lakh units (up 40% compared to 2009), achieving a record high for 10 consecutive years," the company said.

Following its exit from the world's largest two-wheeler maker Hero Honda, Honda had said it would dethrone its erstwhile joint venture with the Hero Group from the number one position in the country within the next 10 years.

The company had announced to intensify focus on Hero Honda's stronghold, mass market segment, where it had been restricted due to the joint venture, and would launch its first 100cc bike by next year.

In December last year, Honda Motor Co had decided to sell its entire 26% stake in Hero Honda to the Indian promoter BM Munjal-led Hero Group. Hero Honda crossed 50 lakh units sales mark in last fiscal.