Hero commences construction of $70-million Colombian unit

Company plans to cater to the South American market through the Colombian plant

Country's largest two-wheeler maker Hero MotoCorp has commenced setting up of its $70 million (around Rs 420 crore) manufacturing facility in Colombia, as part of its plans to expand its global footprint to as many as 50 countries by 2020.

The company, which has formed a wholly-owned subsidiary in the country, plans to cater to the South American market through the Colombian plant.

"The commencement of our operations in Colombia is a definitive leap into the next level of our global foray," Hero MotoCorp Ltd (HMCL) MD & CEO Pawan Munjal said in a statement.

Having already spread our footprint to 19 countries across Asia, Africa and South and Central America, the company is fast setting up a network of manufacturing units across continents to cater to existing and newer markets, he added.

"Once operational towards the middle of FY 2015-16, the plant will have an annual capacity of 78,000 units that will be scaled up to 1,50,000 units in the next 3-4 years. Through our fully-owned subsidiary in Colombia - HMCL Colombia SAS - we will be investing $70 million in the country," Munjal said.

Out of the total project cost of $70 million, HMCL will invest $38 million in capital expenditure, with the rest being utilised as working capital over the next three-year period, the company said.

The equity investment will be made through HMCL's wholly-owned subsidiary in the Netherlands - HMCL BV.

The plant, which is spread over 17 acres, will be the first manufacturing plant by any Indian two-wheeler maker in Latin America.

Eying Latin American market, Hero MotoCorp has already announced its plans to enter Brazil by 2016. The company is also looking to start selling bikes in the US next year.

Hero MotoCorp, which separated from erstwhile partner Honda in 2011, has augmented its global presence, selling products across 19 countries, including Peru, Guatemala, Turkey and Egypt.

The company has established assembly units in Kenya, Tanzania and Uganda in East Africa through its distributors.

In August 2013, it announced plans to enter 50 markets by 2020 with a target of 20 manufacturing facilities across the globe and an overall annual turnover of Rs 60,000 crore.

It is targeting to get 10% of annual sales from export markets, at around 1 million units, by 2017.

Hero MotoCorp has set a cumulative sales target of 100 million units by 2020, having crossed the 50 million milestone last year.