Hero to make 12 mn units, enter 50 markets by 2020

Gurgaon, Aug 8 (IANS) Two-wheeler major Hero MotoCorp Thursday announced its long-term growth plans till 2020, which envision an annual production capacity of 12 million units per year manufactured in over 20 facilities spanning the globe.

"We have become the first Indian two-wheeler company to reach the historic milestone of 50 million units production, and today is also the day when we embark on a new journey," Pawan Munjal, managing director and chief executive, Hero MotoCorp said on the sidelines of an event to mark the production of the company's 50-millionth two-wheeler here at its Gurgaon plant.

"New Hero will now operate at a scale never seen before - footprints in 50 countries with 20 manufacturing facilities across the globe and 100 million cumulative two-wheelers sold by 2020."

According to Munjal, By 2020, the company will manufacture 12 million units from the current 6.9 million installed production capacity.

The company also aims to have a turnover of Rs.60,000 crore per annum from last fiscal's turnover of around Rs.25,000 crore.

Further, the company is aiming to achieve an EBITDA (Earnings before Interest, Taxes, Depreciation, and Amortization) margin of 20 percent.

The production of 12 million units per annum will take place in over 20 manufacturing and assembly plants within and outside India.

Currently, Hero MotoCorp has three manufacturing facilities at Gurgaon and Daruhera, both in Haryana, and Haridwar in Uttarakhand. While two new plants will come up at Neemrana in Rajasthan and in Gujarat, as part of a Rs. 2,500 crore investment plan for increase in production and research and development (R&D) capability.

In July, the company launched its operations in Kenya, where it has set up its first international assembly unit. It also does assembly of completely knocked-down (CKD) units through distributors in Bangladesh and Colombia

In the short-term, the company plans to launch its brand of products in 10 more international markets by the end of this year. By next year, it plans to have six assembly facilities spread across three continents.

"In a weeks time we will enter Peru and next month Ecuador. We plan to enter one or two countries every month. During October-December, 2013, we will enter four more markets most of them in African countries," Munjal said.

"During January-March, 2014, we will enter more markets in Africa, Caribbean and Central America," Munjal said, adding that the company is aiming for 10 percent of its sales to come from export markets by 2017.

Last fiscal the company shipped out 161,043 units which accounted for about three percent of its overall sales.

The company currently assembles or exports its products to Guatemala, El Salvador, Honduras, Colombia, Kenya, Burkina Faso, Ivory Coast, Sri Lanka, Bangladesh and Nepal.

On product offensive, the company is set to introduce over a dozen product offerings to shore up its market share which has come down to under 43 percent in 2012-13 from around 49 percent in 2008-09.

"For customers, we have lined up 12 new products of variants and upgrades during the course of this financial year," Munjal said.

On the indigenous technology development, Munjal said the company recently tested three new engines which were wholly developed in India.

"Three new designed, developed engines were fired up recently for the first time last week. Research and development was all done here and there is a huge excitement about these engines. They are in a range between 100-250 cc," Munjal added.

Hero is trying to spur-up its in-house technology development at its R&D centre and has also tied-up with three international companies for technology alliances. Hero MotoCorp can use erstwhile partner Honda's technology inputs till 2014. Both the companies ended there 27-year old joint venture two years ago.

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