Hero Cycles to set up 2 plants

To invest Rs 200 crore by 2014 to expand globallyA

New Delhi (PTI): Hero Cycles said on Friday that it will set up two new plants by 2014 entailing an investment of up to Rs 200 crore and is also close to picking up stake in two firms in Europe as part of its international expansion.A "We are setting up a new plant in Bihar, which will be operational be January 2014. This will be followed by another at Mangli in Ludhiana in the same year.

The total investment one these two new plants will be around Rs. 170 crore to Rs. 200 crore" Hero Cycles co-chairman and managing director Pankaj Munjal said. The two new plants will have installed capacities of one million cycles per annum each, he added. "Currently our existing plant at Ludhiana has a capacity of six million units. The two new plants will manufacture cycles to cater to our export markets," Munjal said.

Commenting on the company's international expansion plans, Munjal said, "Strategic equity alliances in Europe will happen soon. We are looking for equity investments and are currently in talks with two firms there. We want to be local players there." The equity investments could be creeping acquisitions or buying a chunk at one-go depending on the outcome of ongoing negotiations, he said without disclosing further details. When asked about the size of war chest that the company has prepared for the acquisitions he said, "Hero has a cash reserve of Rs 600 crore to Rs 700 crore, although we may not necessarily use all of that in the acquisition."

Hero Cycles' focus within Europe will be the big markets of Germany and France, he added.On the domestic front, the company is giving its distribution network a new identity with the opening of its flagship retail store 'HeroOne' in South Delhi.