Honda Motorcycle plans second plant to augment production

Honda Motorcycle & Scooter India (HMSI) plans to set up its second plant in the country with an initial investment of up to Rs400 crore. The location of its second plant has, however, not been finalised though the company is reportedly in talks with a number of states.

"Our existing plant is expected to reach 100 per cent capacity utilisation by 2010-11. But this can be stretched by outsourcing of non-critical processes. We are doing an internal study on the second plant, which is likely to come up on 50 acres," HMSI Operating Head (Finance & Accounts) Sushil K Kabra said at the launch of the firm's 110cc bike, CB Twister.

Currently, the two-wheeler maker rolls out its bikes from its Rs1,300 crore manufacturing facility at Manesar in Haryana.

The Honda Motor subsidiary is expecting to sell 1.25 million vehicles this financial year and expects the figure to rise to 1.5 million next year. Last year, HMSI had sold about 1.07 million units.

"We cannot let our sales stagnate, we will take a decision soon," said Naresh Kumar Rattan, marketing and sales head. The company currently commands a market share of 13 per cent in India. However, the major share of the market is with another affiliate of the parent company Hero Honda, which expects to see its sales exceed 4 million units this year.

Last December, the HMSI made its entry into the popular 100cc bike segment, taking on Hero Honda. Honda has a 26 per cent stake in the company, while the Munjal family holds about 29 per cent.

In 2010-11, HMSI expects to up sales 20 per cent on the back of the 110 cc CB Twister, its first bike in the category which will take on Hero Honda's Passion and Splendour and Bajaj Auto's Discover DTSi.