New Delhi, April 21: Hero MotoCorp, India’s largest two-wheeler maker, has entered into a joint venture with Bangladesh-based Nitol Niloy Group.
The joint venture will invest $40 million over the next five years and set up a manufacturing facility in Bangladesh. The facility, which is expected to be fully functional by the second quarter of 2015-16, will have an annual capacity of 1.5 lakh units.
Hero MotoCorp managing director and CEO Pawan Munjal and Abdul Matlub Ahmad, chairman of Nitol Niloy Group of Companies, announced the joint venture today.
Established in 1982, Nitol Niloy has interest in cement, insurance, sugar mills, paper mills, hotels and plastics. It is the sole distributor of Tata Motors vehicles in Bangladesh and also assembles the Indian company’s cars.
Hero will hold a 55 per cent stake in the new venture. Munjal said the plant would be its first full-fledged overseas manufacturing facility.
“The commencement of our operations in Bangladesh is a significant milestone in our strategic global expansion plans. In addition to our first overseas joint venture, this is where our first manufacturing plant outside India will come up,” Munjal said.
“We are aiming to have around 20 per cent of market share in Bangladesh in the first year of our operation,” he added.
Ahmad said the aim of the joint venture was to provide technologically advanced, innovative and fuel-efficient two-wheelers to customers in Bangladesh.
“There will be a total equity injection of $12.6 million in the ratio of 55:45 over a period of two years. The new venture will have a capex of $23.2 million in the first year of its operation and a total investment of $40 million over the next five years,” Hero said in a statement.
The company’s two-wheelers are sold in Bangladesh through 50 retail outlets.