Newly initiated joint venture (JV) of Nitol Niloy Group of Bangladesh and Hero MotoCorp of India looks to be the market leader in the country's two-wheeler industry capturing significant share of the local market, a top official said.
The US$ 40 million JV has, however, primarily set its target to grab 20 per cent of the market share within one year of its operation that is expected to begin in the first quarter of the fiscal year (FY) 2015-16.
"Our plan is to capture 20 per cent of the market share by the first year of our operation (in Bangladesh) and to be the market leader gradually," Pawan Munjal, Managing Director and Chief Executive Officer (CEO) of the Hero MotoCorp Ltd told some selected journalists at a city hotel Monday.
Mr Munjal was in Dhaka to announce the JV initiative, and sign a Memorandum of Understanding (MoU) with Nitol Niloy at a ceremony on the day to form a separate company in this connection.
Under the JV, a motor bike manufacturing plant will be set in the Jessore area targeting to manufacture 150 thousand units of motorcycles as "Hero" brand annually, he said.
Of the total US$ 40 million investment, to be made in the next five years, the JV will initially spend US$ 12.6 million. Nitol Niloy Group and Hero MotoCorp will share the investment at the ratio of 45:55.
While expressing Hero's long term commitment to the Bangladesh market, Mr Munjal said, "We want to continue growing" after launching of the plant.
The JV hopes to manufacture 11 models of two-wheelers ranging from 100cc to 150cc.
In a query about the factors that prompted Hero to invest in the Bangladesh market, Mr Munjal said that Hero MotoCorp recently became the first Indian two-wheeler company to reach record 50 million units of production.
Its global vision is to surpass 100 million units in cumulative production and annual bike and scooter sales of 12 million by the year 2020, he said, adding that the company targets 10 per cent of the total sales in the global market (outside India) that include Bangladesh.
He also mentioned the dense population of Bangladesh as another reason behind increasing demand of the two-wheeler in the local market, which, among others, led Hero to make the investment here.
He further said that the JV will initially manufacture the motorbikes with the spare parts, some of those including engine will be imported from India and some others will be taken from the local market.
However, the spare parts from the local market will be increased gradually to manufacture the two-wheeler in Bangladesh.
In another query, he said that the JV will firstly give attention to market its locally manufactured motorbikes in the Bangladesh market; later, they will also look to export the Bangladeshi products to other countries.
It's the Hero's first overseas joint venture to set up a two-wheeler manufacturing plant outside India since the company commenced its solo journey almost three years ago.
Few years ago, the Hero Group of India and Honda of Japan terminated their long standing joint venture that marketed Hero Honda brand motorbikes in Bangladesh.
After the termination, Honda tied up with a government agency in Bangladesh and formed a separate JV company to manufacture the two-wheeler locally.
New Indo-Bangla JV co eyes to grab major market share in two-wheeler industry
Mohammad Ali | Published: April 22, 2014 00:00:00 | Updated: November 30, 2024 06:01:00
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