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Hero inks pact with Italian firm

New Delhi, Dec. 3: Hero MotoCorp today announced a joint venture with Italy-based component maker Magneti Marelli to make fuel-injection systems and powertrains in the country.

Hero MotoCorp will hold 60 per cent in joint venture HMC-MM Auto Limited, and the duo will invest $27 million over 10 years. Magneti Marelli had reported a turnover of 5.8 billion euros in 2012.

“We have decided to form a joint venture with Magneti Marelli for next-generation fuel injection systems. A total equity injection of $8.5 million in the ratio of 60:40 will be invested in the JV over a period of three years,” Hero MotoCorp managing director and CEO Pawan Munjal said.

The joint venture will target sales of around $100 million in the first five years. “We believe that this development will help the cause of Hero products and engines immensely. It will improve the drivability of our products. It will also help in meeting environmental regulations,” Munjal said.

On the terms of the agreement, Munjal said, “The joint venture is also open to supply to other manufacturers and would not be an exclusive supplier to Hero MotoCorp.” The joint venture will bring in key engine-related technology within the Hero group, thereby reducing the dependence on external vendors, he added.

The new company will start manufacturing by the end of 2014. At present, only two models from Hero MotoCorp — ZMR and Glamour 125cc — have advanced fuel injection systems.

Magneti Marelli CEO Eugenio Razelli said the aim was to partner Hero MotoCorp to equip all Hero motorcycles and scooters with advanced powertrain solutions.

“We believe in partnerships and we care a lot about the new joint venture. We hope to be a great asset for the Hero group,” he added. The venture will help to build electronic fuel injection systems, which will benefit engines used in Hero two-wheelers,” Razelli said.

Hero had recently unveiled 15 two-wheelers, which will hit the market within this fiscal. The company said it would enter Turkey and Egypt in the next few months and was also working on a low-cost entry-level bike.

 
 
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