India's Hero to set up motorbike plant
Hero MotoCorp, India's largest motorbike maker, is set to build a manufacturing plant in Bangladesh with a plan to invest $40 million in the next five years.
“We are launching the full-fledged manufacturing facility in the country as part of our global expansion strategy,” Pawan Munjal, managing director of Hero MotoCorp, told The Daily Star yesterday.
The company will set up its first-ever overseas manufacturing plant in Jessore by 2015, under a joint venture agreement signed with Bangladesh's Nitol Niloy Group yesterday.
Hero will hold a 55 percent stake in the joint venture and the Bangladeshi partner the rest, Munjal said, adding that the motorbikes will sell under the Hero brand.
The total equity will be $12.6 million over a period of two years, he said.
Meanwhile, Japanese auto giant Honda, the erstwhile partner of Hero, has already started selling locally assembled motorcycles and plans to open a manufacturing plant in the country in a couple of years.
“Bangladesh has a huge demand for two-wheeler mainly due to a large population base and road infrastructure,” Munjal said, adding that the plant will have an annual production capacity of 1.5 lakh units.
“We are aiming to grab a 20 percent market share in Bangladesh in the first year of operation.”
Currently, assemblers and manufacturers together sell 3 lakh to 3.5 lakh units of motorcycle a year, according to industry insiders.
The Indian Bajaj brand, with its 45-49 percent share, is the market leader. Walton, Runner, TVS and Yamaha are the other leading brands.
Hero, after separating from Honda in 2011, has augmented its global presence and now sells across 18 countries.
Last year, the company announced plans to enter 50 new markets by 2020 with a target to set up 20 manufacturing facilities across the globe.
Currently, Hero, which holds more than 50 percent market share in the two-wheeler segment in India, has three manufacturing plants in the country, with plans to build another two in Rajasthan and Gujarat.
The company sold a record 6.25 million units of two-wheeler last financial year and aims to increase its annual bike and scooter sales to 12 million units by 2020.
Hero held a press conference at Ruposhi Bangla Hotel in Dhaka to announce the joint venture deal.
“The aim of the joint venture is to provide technologically advanced, innovative and fuel efficient two-wheelers for customers in Bangladesh,” said Abdul Matlub Ahmad, chairman of Nitol Niloy Group.
Hero has already started selling a range of motorcycles in Bangladesh through 50 outlets and opened its first 'signature showroom' in Dhaka yesterday.
At the press conference, Industries Minister Amir Hossain Amu said the government is working to promote 'made in Bangladesh' vehicles.
“We will provide all sort of support if any company wants to produce motorcycles, cars, buses and trucks locally.”
Such a joint venture initiative will help build a vibrant manufacturing base in the country as a lot of ancillary industries will spring up targeting the motorbike industry, said Sandeep Chakravorty, acting Indian high commissioner in Dhaka.
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