Calcutta, Nov.4: Hero Honda plans to set up its third manufacturing facility to meet rising demand. The company has plants at Gurgaon and Dharuhera in Haryana.
Hero Honda, a 50:50 joint venture between the Munjal and Japan’s Honda group, can make two million bikes a year. A spike in demand for bikes has prompted the company to consider a capacity expansion.
The target is to sell two million bikes next fiscal, company sources said. “Our current capacity can sustain us till next year, after which we certainly need more capacity to cater to domestic demand,” they added.
Atul Sobti, senior vice-president (marketing and sales) of Hero Honda, said various options to ramp up capacity at its two plants are being weighed. “The plan is to increase capacity from two million units now to 2.2 million units in three months. After this, the decision on a third plant, or at least an assembly line, can be taken.”
Sources say the company is considering a manufacturing base in the south, which contributes over 25 per cent to its sales. Though the region brings in huge revenues, Sobti said other places, like Punjab in the north and Gujarat in the west, could be possible sites for setting up a new plant. “It will be some time before the location of the new facility is finalised,” he added.
Sources, however, refused to comment on the kind of expansion the company plans by setting up the third manufacturing unit.
Hero Honda sold over two lakh bikes in October — a near 100 per cent jump over the corresponding previous period. It expects a growth of 15-20 per cent in sales this fiscal over last year’s sales of 1.67 million units.