Hero Moto’s Gujarat plant faces delay on land issues

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SummaryHero MotoCorp has pushed back its plans to start production at its fifth plant in Gujarat by a year to the second quarter of 2014-15, as it faces delays in land acquisition.

in Rajasthan.

"The delay in new plants may be seen as a blessing for Hero, especially with sluggish demand in the market. It is true that they have to guard market share against Honda's rapidly increasing presence, but overcapacity would also present new problems," a sector analyst said.

According to Siam, total two-wheeler sales in April-December period of the current fiscal rose 4% to 10.37 million units, compared with the year-ago period. While bikes sales, which account for 80% of two-wheeler volumes, were flat, the growth was largely on the back of an 18% growth in the scooter segment. Hero's sales in April-December FY13 were down 2% to 4.42 million, compared with a 15% growth in volumes to 6.06 million it saw in FY12.

"After three high-growth years, we are seeing a correction in the two-wheeler industry for the last one and a half years. This (sluggish sales) may continue till the first quarter of FY14, but growth will come back as I feel two-wheelers are a necessity," said Anil Dua, Hero's senior vice-president for marketing and sales.

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