Hero MotoCorp to raise output to 7m units per year

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Hero MotoCorp to raise output to 7m units per year

India's largest two-wheeler maker Hero MotoCorp is raising production capacity at its plants to 7 million units per year from 6.2 currently to meet steady demand.

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India's largest two-wheeler maker Hero MotoCorp is raising production capacity at its plants to 7 million units per year from 6.2 currently to meet steady demand.

For instance, capacity at its plant in Haridwar will go up to more than 9,000 units per day from 8,000 units, Anil Dua, Hero MotoCorp's senior VP Marketing & Sales, said in a conference call.

It has almost completed raising scooter production capacity to 50,000 from 35,000, on the back of a strong 30% year-to-date growth in sales. It currently sells the Pleasure scooter in India.

The company expects the two-wheeler industry will see a sales growth of 10-12% in the Jan-March quarter and 11-13% in the next fiscal year.

Two-wheeler sales saw accelerated growth of 25% over the last two years, but have hit the slow lane post the festive season.

Hero MotoCorp, however, has maintained a decent speed, clocking highest ever sales for the October-December quarter at 15.89 lakh units, up 11.3%. It has been consistently selling over 5 lakh units in the past three months.

"We are well in line to meet our guidance for over six million unit sales in the fiscal 2012," MD & CEO Pawan Munjal had said in a statement on Thursday.

The company has gained market share over its rivals and will continue to strengthen its leadership going ahead, Dua said.

Despite increasing competition, especially from its former joint venture partner Honda, Hero MotoCorp has no intention of getting into a price war, he added.

Hero MotoCorp has already launched the Impulse motorcycle and will be launching other motorcycles like Passion X Pro and Ignitor, and Maestro scooter later in the year.

Hero and Japan's Honda had ended their over two-decade old joint venture towards the end of 2010. Hero MotoCorp said it will refresh existing models and bring in new technology, apart from launching new models. It hopes to continue introducing 7-8 models every year.

CFO Ravi Sud said that the company was in the process of building its research and development (R&D) capabilities, but cautioned it won't happen overnight.

Hero MotoCorp currently pays a royalty to Honda for selling the current lineup of models.

It is in talks with international design houses and technology suppliers to collaborate to develop new products.

Meanwhile, Dua said that the company has seen about 20% sales growth in exports and is drawing up a road map to expand its base in existing markets like Latin America and South Asia. South East Asia and Africa are also among the markets that Hero MotoCorp plans to tap to grow exports.

Hero Moto Corp on Thursday reported a 43% year-on-year jump in net profit for the third quarter at Rs 613 crore. Revenue rose 17% year-on-year to Rs 6,031.45 crore in Oct-Dec.

Hero MotoCorp shares were trading up 3.9% at Rs 1,979 on NSE in noon trade on Friday.