The Hindu : Business : Daimler, Hero group form venture to make CVs

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Tuesday, Apr 22, 2008
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Business

Daimler, Hero group form venture to make CVs

Special Correspondent

The 60:40 venture to invest Rs. 4,400 crore in five years

Plant may be located in Haryana, Chennai or Pune
Daimler has no plans to exit Tata Motors

— PHOTO: S. SUBRAMANIUM

HERO’S MOVE: Sunil Kant Munjal (second right), Chairman, Hero Corporate Service, with Andreas Renschler (second left), Member, Daimler AG Board of Management and Head of Daimler Trucks, signing a joint venture agreement in New Delhi on Monday. Brij Mohan Munjal (left), Chairman, and Pawan Munjal (right), Managing Director, Hero Honda Group, look on.

NEW DELHI: Daimler AG and the Hero group on Monday formed a 60:40 joint venture, envisaging an investment of Rs. 4,400 crore in the next five years to develop and manufacture commercial vehicles in India by 2010.

A formal joint venture agreement was inked here. Under the agreement, Daimler will invest Rs. 1,368 crore in the new venture — Daimler Hero Motor Corporation (DHMC) — while the Hero group will put in Rs. 900 crore.

“This joint venture will first focus on light and medium commercial vehicles which will be developed with specific Indian conditions in mind to be launched by 2010. By 2012, it will roll out heavy commercial vehicles,” Daimler Trucks Head Andreas Renschler told reporters here.

Greenfield plant

“We have identified three locations — Haryana, Chennai and Pune. In another four to six weeks we expect to finalise the location,” Hero Corporate Services Chairman Sunil Kant Munjal said.

According to him, the greenfield plant will have an initial production capacity of 70,000 units and will be scalable in future.

The joint venture will aim at a localisation level of 80 per cent when it starts entering the Indian commercial vehicles market by 2010.

Mr. Renschler said that although Daimler already had a commercial vehicles operation in India in the form of Mercedes Benz India, which imports the Actros range of off-road mining trucks, the joint venture with Hero would be responsible for products that were specifically developed for the Indian market and exports to other emerging markets.

“Any import of existing products to India from the Daimler’s portfolio will go to Mercedes Benz India and the joint venture will develop new products for the Indian market,” he added.

He said that since Daimler had a research and development centre in Bangalore, the joint venture should be able to leverage from it. Without putting the number, he said they would make a significant investment in R&D.

Mr. Renschler also made it clear that Daimler had no plans to exit from Tata Motors, where it has a 6.6 per cent stake although it would “see” on how to go about the 3.6 per cent stake in Eicher Motors. Daimler will continue to be a financial investor in Tata Motors, he added.

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