Hero Honda to invest Rs 320 cr in '06

Bike market leader Hero Honda has chalked out a Rs 320 crore (Rs 3.2 billion) investment plan for 2006, which includes about Rs 250 crore (Rs 2.5 billion) for setting up a third plant, Pawan Kant Munjal, managing director said.

The company will also be investing Rs 70-75 crore (Rs 700-750 million) for ramping up capacity at its existing plant at Dharuhera to take care of any capacity constraints.

"We will be making investments at Dharuhera to take care of any capacity constraint problem. After the expansion which is likely to be completed by August, total production between our existing two plants will be 3.6 million units," Munjal told PTI at the Auto Expo.

On the new plant, he said the company was looking to go in for an initial capacity of 4,50,000 units. "We will be investing around Rs 320 crore for this," Munjal said.

On the sales figures for this fiscal, he said the company expected good growth. The company' sales in the nine months ending December 2005 is up about 14 per cent to 21.5 lakh units. "We hope to maintain double digit growth figures in the coming year as well," he added.

Hero Honda is a joint venture between the Munjals and Japan's Honda company. Both hold 26 pet cent each in the company, the biggest bikemaker in India.

The company recently forayed into the scooter market, launching a 100-cc range 'Pleasure' which is priced at Rs 36,240.

Munjal said the company hoped to sell about 1.2 lakh scooters in the first 12 months. "In fact, we have plans to ramp up scooter capacity further," he said.