Hero MotoCorp to enter Brazil's 2-wheeler mkt by 2016
Sao Paulo: India's largest two-wheeler maker Hero MotoCorp is planning to enter Brazil by 2016 as it looks to consolidate position in the fast growing South American market.
It also plans to begin work on its manufacturing facility in Columbia in the next two months, investing USD 70 million.
"We are looking to enter Brazilian market around the Olympics in 2016. We are developing some engines specifically for this market. Its an attractive market for us," Hero MotoCorp Managing Director and CEO Pawan Munjal.
The company needs to develop engines specifically for Brazil as the country uses ethanol blended petrol.
"Brazil is not only the largest market in Latin America but also technically different from other markets as it uses ethanol. Our current engines are not tuned for such fuel and so engines are under modification with the help of AVL," Munjal said.
Initially the company may bring in products from India or utilise the Columbian plant for Brazil, but the market being big, it needs manufacturing base in the country, Munjal added.
He, however, did not share specific timeline for coming up with a manufacturing plant in the country.
"Besides we are also looking for a partner in Brazil," Munjal said.
Brazil, slated to host the next Olympic games in 2016, has an estimated market of 2 million two-wheelers per annum.
When asked about the range of products to be launched in Brazil, Munjal said the company would enter the market with its existing products.
"By 2016, the facility in Columbia would be ready. So we could bring in products from there also," he added.
On the plans for the Columbian facility, he said: "We plan to have bhoomi poojan (start of work) in the next 1-2 months. It will take around 12 months to complete the project".
Besides serving Brazilian market, the Columbia plant will be utilised to supply products to neighbouring countries like Peru, Ecuador, Chili and Central America, he added.
Hero MotoCorp also has presence in various other markets including Peru, Columbia and Guatemala.
Hero MotoCorp, after separating from Honda in 2011, has augmented its global presence and currently sells products across 18 countries, including Peru, Guatemala, Turkey and Egypt.
The company has established assembly units in Kenya, Tanzania and Uganda in East Africa through its distributors. The company is preparing to set up a manufacturing unit in Colombia to cater to the Latin American markets.
In August 2013, it announced plans to enter 50 new markets by 2020 with a target of 20 manufacturing facilities across the globe and an overall annual turnover of Rs 60,000 crore.
Hero MotoCorp is targeting 10 per cent of its annual sales to come from export markets, at around one million units by 2017. It has set a cumulative sales target of 100 million units by 2020, having crossed the 50 million mile stone last year.
In April, it formed a joint venture with Bangladesh's Nitol Niloy group in April and the two plan to invest around USD 40 million (over Rs 240 crore) in next five years.
The JV, in which Hero MotoCorp will hold 55 per cent stake and rest will lie with the Bangladeshi partner, plans to set up a new manufacturing facility which will have an annual capacity of 1.5 lakh units when fully functional by second quarter of 2015-16.
The plant in Bangladesh will be the the first full-fledged manufacturing facility for the Indian two-wheeler major outside India.
The company has three manufacturing facilities in India and is set to commission the fourth facility at Neemrana, Rajasthan thereby taking its total installed capacity to over 7.5 million units.
The company, which sold 6.25 million two-wheelers in 2013-14, is also in the process of building a fifth facility in Gujarat.
For the fiscal ended March 31, 2014, the company's net sales rose to Rs 25,124.91 crore as against Rs 23,582.74 crore in the previous year.