Hero plans Rs 2,500 cr expansion

Hero plans Rs 2,500 cr expansion

India’s largest two-wheeler manufacturer Hero MotoCorp has envisaged an investment of Rs 2,500 crore in a bid to boost manufacturing, and increase market share.

“We have planned a capital expenditure of around Rs 2,500 crore for the next two fiscals up to 2018-19 towards new product development, digitisation, phase-wise capacity installation and expansion of our existing facility at Gujarat, and our upcoming plants in Andhra Pradesh,” Hero MotoCorp Chairman, Managing Director and Chief Executive Officer Pawan Munjal told shareholders in the company’s annual report.

The said capex also includes investments towards upgradation and modernisation of existing plant and machinery. “We are looking forward to commencing production at our upcoming manufacturing facility in Bangladesh in 2017-18, our second manufacturing facility at a global location, following the facility in Cali, Colombia,” Munjal said.

Currently, the Bangladesh market is served through the export of over 12 motorcycles and scooters, which are retailed through 195 outlets. The said plant will come up at Jessore, with an annual installed capacity of 1.5 lakh units, and is slated to be operational in the first half of 2017-18.

“During 2016-17, the fifth plant of the company at Halol, Gujarat, started commercial production during the third quarter. Hero signed a sales deed with the Andhra Pradesh Industrial Infrastructure Corporation for setting up its sixth manufacturing facility at Sri City,” he said.

Meanwhile, the first phase capacity of the Vadodara plant will have a capacity of 1.2 million units annually. Gradually, the overall production capacity will be increased to 1.8 million units annually.

During 2016-17, Hero clocked sales of 6.66 million units, against 6.63 million units in the previous fiscal. Its profit after tax in 2016-17 stood at Rs 3,377.12 crore, against Rs 3,160.19 crore in the previous year, translating to an increase of 6.86%.

Hero has sold over 70 million units till date, enjoying a market share of 36.9% in the domestic two-wheeler market at moment.

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