Hero Honda Investment Policy

Investment Policy

The company keeps on increasing the production capacity from time to time to cope up with the rising demand. During the year 2005-06, the company added Rs 399 crores in fixed assets to expand the manufacturing capacity. The production capacity of Gurgaon plant was increased from 5000 to 6500 units a day in the previous year. To tap the increasing demand for the motorbikes, the company decided to carry the process of expansion further and increase the capacity at the Dharuhera plant to 6500 units by the fall of 2006. This would take the installed capacity to roll out 13000 units a day. This capacity expansion will take care of the growing demand in the short run. The company is in the process of setting up a third plant to take care of the demand in the medium-term as it would also enable the company to realize its mandate of becoming a global scale and world-class manufacturer. A state-of-the-art manufacturing plant with an investment of Rs 400 crores to be operational by mid 2007 at Haridwar with an initial production capacity of Rs 5,00,000 is proposed. Besides, the company, in order to improve its efficiency and to cut down the cost, has made investment in augmenting its welding capacity. The company has also invested in technology that will help in localizing the production of gear boxes. By 2010, Hero Honda and its ancillaries will invest Rs 1900 crores in the new plant, achieving a capacity expansion to 15 lakh units, thereby enabling the company to cater to future market demand and consolidate its market leadership.