Celebrating its 25 years of operation in India, Hero Honda Motor Ltd (HHML) on Tuesday inaugurated its third plant in the country in Haridwar. The company, which is getting fiscal incentives like exemption from excise duty for 10 years and income tax exemption for first five years from the state government, is mulling to maximise volume this year from this plant to neutralise the rising input costs. ?Rising input costs are causing tremendous pressure on margins. With fiscal benefits being offered in the state, we plan to maximise volumes at the Haridwar plant to maintain our margins,? says Pawan Munjal, managing director, Hero Honda.
The company is working on ways to utilise the under capacity that has been created at its existing plant in Dharuhera and Manesar due to decline in volumes. ?We have set up a team that is working on a programme called ?Samadhan? to explore the option of utilizing the over capacity that has been created at its existing two plants,? adds Munjal. Set up at an initial investment of Rs 450 crore and which would go up to Rs 600 crore by the end of 2008, the Haridwar plant will initially produce 7,00,000 units in the first year of operation and this would be further scaled to 1.5 million units by 2010. This will entail a total investment of Rs 1,900 crore by Hero Honda and its associates including the ancillary partners.? To begin with, 40 ancillaries will set up their facility in the industrial parks followed by another 60 over the next two years.
The country’s largest two-wheeler manufacturer plans to initially roll-out Splendor Plus followed by Passion from its new plant. This would be followed by production of new high volume and high margins vehicles spread across different segments as part of its plans to launch 12 models over the next 18 months.
…Sets up infra company
Hero Honda India Ltd, has woken up to corporate social responsibility in a big way. As part of the company’s third plant in Haridwar, Hero Group has set up a separate company called Arrow Infrastructure to manufacture industrial parks, residential complexes and shopping malls. ?These facilities would come up within the 275 acre manufacturing complex, company’s biggest so far, inaugurated in Haridwar on Tuesday.
Initially set up by the Hero Group, the company is open to rope in partners as and when it forays into other projects. ?Though Arrow Infrastructure has been initially created by the Hero Group to cater to the needs of residential complexes and other amenities within the Haridwar plant, the infrastructure company would go out and look for other business opportunities in the future,? says Pawan Munjal, managing director, Hero Honda Motor Ltd, adding that the company is open to bring in partners as and when the need arises. Munjal, however, refused to divulge further details.
?(Travel for the story was sponsored by Hero Honda)