The Hindu Business Line : Hero Honda to finalise third unit location, investment soon

TWO-WHEELER manufacturer Hero Honda Motors is close to finalising a location for its third manufacturing plant in the country. The company, which now has capacities of 2,40,000 units annually from its existing manufacturing facilities will shortly announce the location and investments that will go into the new manufacturing facility, Mr Pawan Munjal, Managing Director, said here on Monday.

"We have been experiencing capacity constraints, especially after launching new models, and while we are in the process of continuously adding capacities the issue will be resolved after our third facility is set up," Mr Munjal said. "We expect to reach the three-million level in this fiscal with our existing facilities," he added.

The two-wheeler company is also in talks with joint venture partner Honda to make its operations a sourcing hub for the export markets, Mr Munjal said. "Honda has manufacturing and distribution presence across the world but we are convincing them to make us the sourcing hub for the 100, 125 and 150 cc range. There is a significant cost advantage in it and the talks are currently on about various possibilities," he said.

The company's exports, largely to Sri Lanka, Bangladesh and Latin America, grew over 60 per cent in the last fiscal to 65,000 units and it is expecting to cross the 100,000-mark this year. Mr Munjal, however, ruled out the possibility of setting up assembly operations to feed its export business.

Hero Honda Motors, meanwhile, is also gearing up for the launch of two other models, one of them in the 150 cc power segment of the motorcycle market, in the current fiscal.

Work is also under way on a range of new Quantum Core engines that Honda is now developing that will soon be deployed on its new vehicles, especially in the power range, said Mr Atul Sobti, Executive Director, Business Operations.

Meanwhile, the company's new 125 cc Glamour model has already sold over 15,000 units in the two weeks since its launch, according to Mr Sobti, who said that work is on to ramp up production in a phase, given the capacity constraints that it is currently experiencing. "We expect to reach the level of 30,000 units/month six months from now," he said.

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