The world's largest two-wheeler manufacturer, Hero MotoCorp Ltd, is expanding its reach to Latin America by constructing a manufacturing plant in Colombia.
The company will invest $78 million in the venture, of which $38 million would be capex with the rest being working capital.
The plant, which will come up at Villa Rica, Cauca, about 500 km South West of Bogota, will be operational by the middle of next financial year with a capacity to produce 78,000 units and going up to 150,000 units in phases.
In a communication to the stock exchanges, Hero MotoCorp said its entry into the Latin American market signified a "definitive leap into the next level of our global foray''.
With presence across 19 countries in Asia, Africa and South and Central America, Hero MotoCorp said it was establishing a string of manufacturing facilities across the globe to serve "existing and newer markets''.
The factory coming up at at Villa Rica in Colombia was the "first full-fledged plant by an Indian two-wheeler manufacturer in Latin America'', the company said.
Annual capacity
After it becomes operational in the middle of FY 2015-16, the plant would have an annual capacity of 78,000 units which would be scaled up to 150,000 units over the next three to four years.
Hero MotoCorp plans to invest through its fully-owned Colombian subsidiary — HMCL Colombia SAS — $70 million in the venture — $ 38 million in capex with the rest being used as working capital over the next three-year period. The equity investment will be made through the company's wholly-owned subsidiary in the Netherlands — HMCL BV.
Pawan Munjal, Managing Director & Chief Executive Officer, Hero MotoCorp Ltd, who laid the foundation for the plant, stated that with the establishment of the world-class plant in Colombia, Hero MotoCorp would "bring the latest modern technology'' into the country.
As the dealer network grows and as it localises its operations, the plant would "generate immense direct & indirect employment, thereby contributing to the overall development of Colombia''.
Cumulative production
HMCL says that it plans to cross 100 million units in cumulative production, and annual bike and scooter sales of 12 million units by the year 2020. It also aims at having more than 20 manufacturing and assembly plants across the world with sales in more than 50 countries by then.
Shares of Hero MotoCorp were trading at Rs 2,608.95, up by Rs 25, on the NSE.