Calcutta, Oct. 18: Honda Motorcycle & Scooter India (HMSI), a wholly-owned subsidiary of Honda Motor Company of Japan, has decided to expand its capacity two-and-a-half times to five lakh scooters in the next couple of years, from its present capacity of two lakh units per annum. The expansion is likely to involve an investment of Rs 250-300 crore.
Confirming the move, A. S. Thakur, senior sales executive of the company said the steady demand for its scooters, particularly in the midsize segment, prompted it to go for massive expansion before the completion of financial year 2005.
The company has set a target of selling 1.65 lakh scooters in the current financial year and 3.5 lakh units for the next fiscal. HMSI, which introduced its first model Activa in 2001, sold 55,000 units in the last financial year.
Thakur also noted that HMSI has already acquired 26 acres of land adjacent to its factory at Manesar in Haryana’s Gurgaon district.
“The expansion project is being implemented and will be completed soon,” Thakur said.
The new production line may include a manufacturing facility for motor bikes as well. The company has obtained the mandatory no-objection certificate from Hero-Honda, which is a joint venture between the Hero group and Honda Motors of Japan, to set up a production line after 2004.
“According to the NoC, we cannot manufacture and sell motorcycles up to 2004, but after that we are free to introduce our products in the market,” remarked Thakur.
The increased capacities will also help the Japanese parent to source two-wheelers in order to cater to various markets, including the US and Europe.
“We have already started exporting our products to countries like the US, south and central Africa and neighbouring south Asian countries. We are now targeting the European market as well,” Thakur said.
The company aims to export 10,000 scooters in the current financial year from merely 2,000 units exported last year.
In order to strengthen marketing network, the company has also decided to increase the number of dealers from the current 88 to 102 during the current year. Todi Honda is the first dealership given by the company in Calcutta.
Set up in 1999, HMSI has already invested around Rs 300 crore to set up it first manufacturing unit, which has a manpower of over 1,000. The company, which launched its second model—Dio—in September this year, has plans to launch at least one model every year.
Thakur said the company’s biggest advantage is that its products have a 98 per cent indigenisation level, which gives cost benefits as well as a strong maintenance facility.