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Honda to invest Rs 1,000 cr in new 0.6 m assembly line, products

Minoru Kato said HMSI contributes 30 per cent of the volumes for Honda globally

Press Trust of India  |  Mumbai 

Representational image
Representational image

The second largest maker on Thursday said it will invest over Rs 1,000 crore in a new 0.6 million-unit assembly line and develop four new products to help it realise the 20 per cent sales growth target set for itself for fiscal 2018.

"We will be opening the fourth assembly line at our Karnataka plant by July this year. This will be our 11th assembly line in the country. We will also launch four brand new models this financial year - two each and For all these we have budgeted over Rs 1,000 crore in capex this year," Minoru Kato, the newly-appointed president & chief executive at Motorcycle & Scooter India (HMSI) told reporters here today at his maiden media interaction.

The company which clocked a revenue of a little over Rs 20,000 crore in fiscal 2017, up from Rs 18,000 crore in the previous year, has so far invested Rs 7,800 crore in the country since it started independent operations in early part of the last decade after breaking its association with Hero Motorcorp.

"From the growth side, we have set a target of selling over 6 million units this fiscal year, having already crossed the 5-million milestone in fiscal 2017. To achieve this we have set a sales growth target of 20 per cent," Kato said.

Describing fiscal 2018 to be Honda's most ambitious scale-up in the country, Kato, who took over on April 1 from Vietnam said that his next two focus areas will be to maximise customer satisfaction and improve the quality of daily operations, which he did not elaborate.

Kato said today contributes 30 per cent of the volumes for globally but refused to share the value contribution,making the largest unit for Japanese parent.

grew 12 per cent in fiscal 2017 despite the two shocks in the form of the note ban and the March 29 Supreme Court ban on selling BS-III models from April 1, while the industry has clipped at only 5 per cent. This means, HMSI alone contributed around 57 per cent of the incremental volume in the year to the 17-million units market.

Kato said the 0.6-million unit fourth assembly line at Narsapura near Bangalore will take total capacity to 6.4 million by July. This would make the Karnataka facility the largest of its four plants with an annual installed capacity of 2.4 million.

Its other three plants are the 1.6-million per annum unit at Manesar in Haryana; the 1.2-million Tapukara plant in Rajasthan and the 1.2 million only unit at Vithalapur in Gujarat.

Senior VP for sales and marketing YS Guleria said the company became the third largest exporter last fiscal by clocking 41 per cent growth in shipments at 2.84 lakh units, while the industry-wide exports declined by over 8 per cent in the year.

"This year, we have set a target of crossing 3 lakh units of shipments primarily to the Saarc markets," Guleria told PTI in an interaction.

Whether HMSI is left with any unsold inventory of BS- III models following the apex court ban on their sales from April 1, Guleria said the company liquidated all its stock by March 31 itself as it offered heavy discounts. But he was quick to add that the company did not book any losses from the discounted sales as that was pooled from its advertising spend during the period.

Guleria said HMSI is closing in on the market leader Hero Motorcorp in overall volume when exports are combined.

"The market share difference is only 8 percentage points now when it come to the overall volume while in domestic sales we still lag by 10 percentage points at 27 per cent for us against their 37 per cent," he said, adding Hero's domestic sales stood at around 6.48 million in fiscal 2017.

While HMSI increased its market share by 200 bps in the year, its scooter share rose to 67 per cent which it wants to bring down to 66 per cent in fiscal 2018 and increase the share from the present 14 per cent to 15 per cent.

First Published: Thu, April 20 2017. 22:06 IST