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India's largest two-wheeler maker Honda Motorcycle and Scooter India (HMSI) today laid the foundation stone for setting up its fourth plant in the country at Vithalapur in Gujarat.
Coming up over 250 acres with an investment of Rs 1,100 crore, the plant will have an installed capacity of 1.2 million units. This would take HMSI's net installed capacity in India to 5.8 million units once the plant becomes operational in 2015. The company plans to scale up operations to touch 1.2 million units production capacity within a year's time.
Keita Muramatsu, president and chief executive officer, HMSI said that the company already has a 55 per cent share in the automatic scooters market in the country. "Indian automatic scooter market is growing at 2.5 times the speed of overall two-wheeler industry growth. The latent demand of automatic scooter is so strong that with improving infrastructure in rural India, we foresee that this segment sale can go up to 35 per cent of overall two-wheeler sales over a 5-10 year horizon."
With this plant, HMSI's cumulative investment in the country would touch Rs 6,200 crore. Around 22 vendors of the company including Neel Metal Products Ltd, Amtek Auto, FCC, FIEM Industries, Varroc Polymers, Endurance Techonologies are expected to invest close to around Rs 900 crore in Gujarat. These component makers would be setting up their facilities in the vicinity of the HMSI plant.
HMSI aims to sell 18.2 million two-wheelers worldwide in 2014-15 and for the first time, India will contribute almost 25 per cent of its global sales. Honda also plans to export nearly 10 per cent of the production of the Gujarat plant. Last year it had exported 170,000 units from India.
As of now HMSI has set a target of selling 4.5 million units in India this year, and has an installed capacity of 4.6 million units in the country. Hence, it plans to commission the Gujarat plant fast to meet the growing demand. It has a 26 per cent share of the overall two-wheeler market in the country. Y S Guleria, vice president, sales & marketing, HMSI said that during the first half of the year, the two wheeler market has seen a 16 per cent growth, and by the end of the year, around 12-14 per cent overall growth is expected in the industry.
