Hero MotoCorp Ltd forms JV with Magneti Marelli, companies to invest $27 mn

Written by PTI | New Delhi | Updated: Dec 4 2013, 21:25pm hrs
Hero MotocorpThe JV firm 'HMC-MM Auto Ltd', in which Hero MotoCorp will hold 60 per cent stake, is targeting sales of $200 million in the next ten years. Reuters
Country's largest motorcycle maker Hero MotoCorp Ltd today announced a joint venture with Italy - based Magneti Marelli for new generation powertrains and said both the partners would invest USD 27 million in the JV over the next ten years.

The JV firm 'HMC-MM Auto Ltd', in which Hero MotoCorp will hold 60 per cent stake, is targeting sales of USD 200 million in the next ten years.

"We have decided to form a JV with Magneti Marelli for next generation fuel injection systems...a total equity injection of USD 8.5 million in ratio of 60:40 will be invested in the JV over a period of three years," Hero MotoCorp MD and CEO Pawan Munjal said.

The total investment is likely to be around USD 27 million over the next ten-year period, he said adding that the JV would be targeting sales of around USD 100 million in the first five years.

"We believe that this development will help the cause of Hero products, Hero engines immensely. It will surely improve the drivability of our products. It will also help in meeting environmental regulations as we go forward," Munjal said.

Elaborating on the terms of the agreement, Munjal said: "The JV is also open to supply to other manufacturers and would not be an exclusive supplier to Hero MotoCorp".

The JV will bring in key engine related technology within the Hero group thereby reducing dependence on external vendors, he added.

The JV company would start manufacturing by the end of 2014. Currently, only two models from Hero MotoCorp--ZMR and Glamour 125 cc, have advanced fuel injection systems.

Commenting on the JV, Magneti Marelli CEO Eugenio Razelli said the aim is to partner with Hero MotoCorp in order to equip advanced powertrain solutions to all Hero motorcycles and scooters.

"We believe in partnerships and we care a lot about this this new JV. We hope to be a great asset for the Hero group," he added.

The JV would help build electronic fuel injection systems which will offer advantages to the engines used in Hero's two wheelers, Razelli said.

To enhance its R&D capabilities, HeroMotoCorp has already forged alliances with US based Erik Buell Racing (EBR) and Austria's AVL.

The company has also roped in Italian two-wheeler design firm 'Engines Engineering' to partner it in bringing next generation product line up.

Magneti Marelli, which designs and produces advanced systems and components for the automotive industry around the globe, reported a turnover of 5.8 billion Euros in 2012.