Hero forms joint venture with Italy's Magnetti Marelli

04 Dec 2013


Hero MotoCorp, the country's largest two-wheeler maker, has announced a joint venture with Italy's Magnetti Marelli, for developing powertrains and next-generation electronic fuel-injection systems.

The joint venture, to be called HMC-MM Auto Ltd, is Hero MotoCorp's first joint venture since parting with its former partner Honda a little over two years ago (See: Hero, Honda split; seal new licensing deal).

Hero will hold 60 per cent stake in the new entity while Magneti Marelli will hold the remaining 40 per cent. The companies have envisaged initial equity investment of $8.5 million in the joint venture over a three-year period.

The total investment is likely to be around $27 million over the next 10-year period.

''The new firm shall be taking up development and manufacturing of next-generation fueling systems. This is one of the most important areas in various technologies involved in making of better fuel-efficient, environment friendly modern engines.

''Fuel technology has undergone a major shift over the past two decades. The advances in electronics and control technology, which have become smarter and real time, have given a very useful tool in the hands of engine designers to precisely optimise fuel supply for control of output performance, emissions, fuel consumption and usage of certain fuel blends,'' Pawan Munjal, managing director and chief executive, Hero, said.

''This development will help the cause of Hero engines, improve our products and help meet environmental regulations.''

He added the venture would start manufacturing by the end of next year and was targeting $200 million in turnover in 10 years.

The venture might also supply components to other manufacturers, Munjal said.

HMC-MM Auto Ltd will develop its own autonomous development centre for building electronic fuel injection (EFI) systems, which will offer distinct advantages to the engines used in Hero's two-wheelers such as adaptability to different working climates, altitudes, improved performance and fuel efficiency, environmental regulations and gasoline blends, he said.

The JV will also make available additional functionality such as immobilisers, traction and slip control, multi map, flexi fuel and multi fuel management etc.

Most importantly, it will bring key engine-related technology within the Hero Group, thereby reducing dependence on external vendors.

With an in-house R&D and design and technology facilities and over 400 highly-skilled engineers working on future product line-up, the company plans to shift its current R&D centres at the Gurgaon and Dharuhera factories to the `Hero Global Innovation & Research & Design Centre' at Kukas on the outskirts of Jaipur in Rajasthan.

Hero MotoCorp will be investing about $75 million in the state-of-the-art facility, which is expected to commence operations by the first quarter of calendar year 2015.

Hero MotoCorp has also forged alliances with the US-based Erik Buell Racing (EBR) and Austria-based AVL to further enhance its in-house R&D capabilities and engine technologies.

It has also roped in the renowned Italian two-wheeler design firm Magneti Marelli designs and produces advanced systems and components for the automotive industry.

With its 83 production units, 12 R&D centres and 26 application centres in 19 countries, about 36,900 employees and a turnover of 5.8 billion Euros in 2012, the group supplies to all leading automobile and two-wheeler makers in Europe, North and South America and the Far East.

Its business areas include electronic systems, lighting, powertrain, suspension systems and shock absorbers, exhaust systems, aftermarket parts and services, plastic components and modules and motorsport.

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