Daimler-Hero venture sign MoU for CV facility

Chennai: The joint venture of Daimler AG and Hero Group, signed a MoU with the Government of Tamil Nadu for setting up a Rs 4,746-crore greenfield commercial vehicles facility in the State.

The plant of Daimler-Hero Motor Commercial Vehicles Ltd (DHCVL) is coming up on a 400-acre plot at Oragadam, near Chennai, a growing industrial suburb, sandwiched between the two automotive hubs of Maraimalainagar and Sriperumbudur.

From 2010, the joint venture will produce about 70,000 light and medium duty commercial vehicles.

The project will provide employment to 3,000 people and generate over 20,000 indirect jobs.

The “80 per cent local content” aspect of the project has enthused the auto components manufacturers here, who believe that they may need to put in fresh investments to cater to DHCVL.

A number of auto parts vendors told Business Line today that with the existing players also ramping up volumes, it would be difficult to supply to the new comer from their existing plants.

DHCVL will invest over €700 million (Rs 4,746 crore) over the next five years, of which €350 million will be the equity.

Of this, Daimler will contribute €220 million as foreign direct investment.

DHCVL decided on Chennai considering its proximity to vendor base, infrastructure, transportation connectivity and the large number of skilled workers.