Hero Honda eyes 7.5 lakh units a year from proposed 4th plant

Besides, the company is expanding the capacity of its three existing facilities to up to 65 lakh units per annum within this fiscal from 61.5 lakh units at present.

"For this financial year, we had earmarked a capex of Rs 900 crore. The majority of this, say Rs 500 crore to Rs 550 crore, will go for setting up the fourth plant," Hero Honda Motors Chief Financial Officer Ravi Sud told PTI.

Out of the planned investment for the proposed plant, some amount may be carried forward to the next fiscal as and when construction proceeds, he added.

When asked on what consideration this investment figure has been arrived at, Sud said: "This figure includes land cost and an installed capacity of 7,50,000 units."

He, however, declined to share when the company will announce the location of the plant.

Hero Honda Motors Senior Vice-President (Marketing and Sales) Anil Dua said the company has almost finalised the location and an announcement will be made soon.

Earlier, sources had said the company had shortlisted Gujarat and Karnataka for setting up the plant.

The company at present produces 61.5 lakh units from its three manufacturing plants at Dharuhera and Gurgaon in Haryana, and Haridwar in Uttarakhand.

"We have enough capacity to go for this fiscal. In the meantime, we are also expanding out existing capacity to 64-65 lakh units," Dua added.

He had earlier announced a sales target of 60 lakh units for this fiscal. Hero Honda had sold a total of 54,02,444 motorcycles and scooters in FY'11 as against 46,00,130 units in the previous fiscal, up 17.44 per cent.

Hero Honda had earlier planned to announce the details of the proposed plant by last year but it got deferred due to its eventual break-up with the Japanese promoter Honda.