Hero Motocorp to invest Rs 2,575 crore for capacity expansion and R&D centre

India’s largest two wheeler company Hero Motocorp announced on Monday that,  it is going to invest Rs. 2,575 crore to set up a full fledge R&D centre and for capacity expansion. The company will invest Rs. 400 crore to set up full fledge R&D centre in Kukas at Rajasthan, Rs. 2,000 crore to set up 4^th plant in Rajasthan, 5^th plant in Gujarat and capacity expansion at Dharuhera, Gurgaon and Haridwar plants. The other investments will account for Rs. 175 crore.

The current capacity expansion at the cost of Rs. 500 crore will give company an annual capacity of 7 million units across the three plants. The fourth plant at Rajasthan will attract an investment of Rs. 400 crore and will have an annual installed capacity of 0.75 million units. The plant is expected to commission by first quarter of financial year 2013-14. The fifth plant in Gujarat will attract an investment of Rs. 1,100 crore and will have an installed capacity of 1.2 million units. The plant is expected to commission by second quarter of financial year 2013-14.

The company will have a combined installed capacity of 9 million units once the fourth and fifth plant gets operational. The new R&D centre will come at Kukas, near Jaipur in Rajasthan, it will spread across 250 acres and will also have a test track. The new R&D centre will have strong workforce of 500 people.

It seems like Hero Motocorp will leave no stone unturned to achieve its ambitious target of 10 million units by 2016. The company also stated that it will launch its first motorcycle based upon its indigenous technology by 2014. This capacity expansion will create headache for HMSI (Honda Motorcycles and India ltd.) which aims to become number 1 in India by 2020.