Hero MotoCorp enters Bangladesh through Nitol Niloy Group JV
Hero MotoCorp Ltd (HMCL) is working towrads expanding its global footprint to as many as 50 countries by 2020. Today, the company launched operations in Bangladesh through a Joint Venture (JV) with Nitol Niloy Group. The JV was announced by Mr. Pawan Munjal, Managing Director & Chief Executive Officer, Hero MotoCorp Ltd, and Mr. Abdul Matlub Ahmad, Chairman, Nitol Niloy Group of Companies, in the presence of the Industry Minister of Bangladesh H.E. Mr. Amir Hossain Amu and the Acting High Commissioner of India in Dhaka, Mr. Sandeep Chakravorty, and Group Managing Director of Nitol Niloy Group, Mr. Abdul Musabbir Ahmad.
â€śThe commencement of our operations in Bangladesh is a significant milestone in our strategic global expansion plans. In addition to being our first overseas joint venture, this is also where our first manufacturing plant outside of India will come up. Once operational by the second quarter of Financial Year 2015-16, the plant will have an annual capacity of 150,000 units. We are aiming to have around 20 per cent of market share here in the first year of our operation.
With the setting up of the state-of-the-art world class plant here, we will bring the latest modern technology into the country. This will generate direct & indirect employment and opportunities in the country.
â€śI am delighted to have the Nitol Niloy Group come on board as our partner in this market. I am sure with their rich experience in this market we will be able to provide convenient, fuel-efficient mobility to every customer,â€ť said Mr. Pawan Munjal, Managing Director & Chief Executive Officer, Hero MotoCorp Ltd.
Mr. Abdul Matlub Ahmad, Chairman, Nitol Niloy Group of Companies said â€śThe scope of this agreement is quite significant for our Group as our partner in this JV is the worldâ€™s largest manufacturer of two-wheelers. The aim is to join hands with Hero MotoCorp in order to provide technologically-advanced, innovative and fuel-efficient two-wheelers for customers in Bangladesh. With this JV, our business and enterprise now enters a new era of innovation and excellence. I agree with Mr. Munjal that through this JV, we will be playing a catalyst role in the development of ancillary industry in Bangladesh and beyond.
While expanding global footprint, this is Hero MotoCorp’s 1st overseas JV to set up a two-wheeler manufacturing plant outside of India. Hero will hold majority stake of 55% and Nitol Niloy Group will hold the remainder 45% stake. An equity of US$ 12.6 million in a ratio of 55:45 over a period of 2 years is outlined. The JV has a CAPEX of US$ 23.2 million in the first year of operation (Financial Year 2014-15) and a total investment of US$40 million over the next 5 years.
Bangladesh’s manufacturing plant will be operational by the Q2 FY 2015-16. As of now, Hero two-wheelers are being made available in Bangladesh through 50 retail outlets. Mr. Munjal today inaugurated the first flagship Hero showroom in Dhaka. More outlets will be added in quick time.
Entry-level segment 100cc bikes- HF Dawn & HF Deluxe, Splendor+, Splendor Pro, Splendor iSmart, Passion Pro, deluxe segment 125cc Super Splendor and Glamour and premium segment 150cc Xtreme and Hunk, and the 100-cc scooter Pleasure are being made available in Bangladesh. 5 year warranty is being offered with each bike.
Splendor iSmart is available with i3S (Idle Stop and Start System) technology. i3S technology automatically shuts the engine when idling, and turns it on when needed by pressing the clutch to improve fuel economy in city riding.
Since separating from partner Honda in 2011, Hero two-wheelers sells in 18 countries today. these include Peru and Ecuador in South America; Guatemala, Honduras, El Salvador in Central America; Kenya, Mozambique, Tanzania and Uganda in East Africa; Burkina Faso, Ivory Coast, Congo and Angola in West Africa and most recently Turkey and Egypt. Assembly units have been set up in Kenya, Tanzania and Uganda in East Africa through its distributors.
Hero MotoCorp has 3 state-of-the-art manufacturing plants in India. A 4th manufacturing plant at Neemrana will soon be functional to take annual installed capacity to over 7.5 million units. A 5th manufacturing unit is to be built in Gujarat. In FY 2013-14, Hero MotoCorp sold 6.25 million two-wheelers. HMCL has multiple global technology alliances with internationally-renowned design and technology firms from the US, Italy and Austria. Hero is also setting up a Centre of Global Innovation and Research & Design.