Hero Honda starts new plant at Haridwar

New Delhi: Hero Honda started a new plant at Haridwar in Uttaranchal with an initial investment of Rs 450 crore.

The plant, its third in the country, will manufacture between 5 and 7 lakh 2-wheelers which can be scaled up to 10 lakh units by the year end.

Aware that it might be difficult to sell more bikes in a sluggish market, Managing Director Pawan Munjal said, “We have initiated Project Samadhan internally to identify new areas of growth for our three plants. We hope to see additional demand created in coming years.”

The four key elements of the new strategy includes a major push into rural India, expanding distribution reach even to mandis, tie-ups with more cooperative and rural banks and aggressively wooing college students and creating a new and growing market segment.

The bike major, which sold more than 3.03 million units in FY08, has increased its market share in the period to 52 per cent from 49 per cent in the previous financial year.

Munjal said that he expected demand to pick up. “The two-wheeler industry has a long way to go in India, I see demand for motorcycles increasing in coming years. China manufactures 20 million units per annum compared with 8-8.5 million units for India. I see the demand slowdown only as a temporary phase.”

The third assembly plant in Haridwar will be used to manufacture Hero Honda’s Splendor Plus and Passion range of motorcycles and other high volume, high margin offerings.

The Munjal-promoted Hero Group is foraying into real estate construction through a group company called Arrow Infrastructure and said it may lookout for a partner in the future.

Arrow Infrastructure, which has developed a residential complex for the employees of Hero Honda’s new plant here, would look beyond executing projects for the Hero Group, Hero Honda Motors’ MD Pawan Munjal said.