Hero MotoCorp’s plan to invest Rs. 2,575 crore in setting up plants and for research and development has resulted in a strategic agreement with US-based Erik Buell Racing (EBR). The two-wheeler manufacturer has apparently invested Rs. 110 crore in the US-based company. The investment is a win-win for both the parties. It will help EBR to expand its production capacity at Milwaukee. It will also lead to the firm hiring more professionals. As for Hero MotoCorp, the investment is the need of the hour as it needs a lot of technological support to come up with more and more powerful bikes.
To continue its leadership in the local market and to make a mark globally, the company needs to regularly upgrade its bikes and come up with advanced versions with superior technology. Thus, a lot of research and development effort is required to stay ahead of the competition. The company has already hired 300 engineers for its own R and D support. Also, the company has a tie up with the Austrian auto engineering firm AVL. This tie-up is focused towards engine development. Perhaps, after the separation from Honda, this is the first time that the company has started focusing on in-house as well as external support for research and development.
The company has big plans and there would be aggressive product launches in near future. The company is also aiming at international expansion. For all this, the company is looking at both organic and inorganic sources for technological growth. The tie up with EBR might have resulted in Hero picking up some stake in EBR in return for the investment. However the same has not been confirmed. Out of the total investment plan, Rs. 2,000 will be used for setting up of two new plants, one in Gujarat and another in Rajasthan. Some amount would be used for expansion of the existing facilities. The rest of the amount will be dedicated for the research and development activities. This also includes setting up of a new facility on 250 acres of land in Jaipur.
