K.T. Jagannathan

Chennai: Daimler Hero Commercial Vehicles (DHCV), founded a few weeks ago by Hero Group and Daimler AG, has decided to set up its proposed truck plant at Oragadam, near here.

Proximity to important suppliers, robust infrastructure, transportation connections and the presence of a large number of well-qualified skilled workers in the region are among the reasons cited for the joint venture company to locate its plant near Chennai, according to a release posted in the website of Daimler.

The plant site, which measures 1.6 square kilometers (about 400 acres), is located at Oragadam in Kanchipuram district, in the direct neighborhood to several supplier parks where Daimler Hero Commercial Vehicles could also secure sites for future suppliers, the release further says.

The Indo-German joint venture is expected to commence civil work at the site soon. At Oragadam, the joint venture will produce commercial vehicles under a new brand name for the Indian volume market and exports. Expected to go commercial in 2010, the plant, the release says, will produce up to 70,000 trucks in its initial phase of operation. At a later point, production of trucks for export markets, whose product requirements are similar to those of the Indian market, is also planned.

``DHCV is aiming to achieve a localization rate of up to 80 per cent in order to optimally utilize cost advantages. The proximity of the Oragadam plant to the local supplier industry will help greatly utilize these cost advantages and will also help the local industry and community,'' the release adds.

Daimler AG and the Hero Group signed the contract establishing the joint venture in Delhi on April 21. ``Total investment in the Indo-German joint venture will amount to over Euro 700 million over the next five years. The equity capital brought in by Daimler and the Hero Group will amount to Euro 360 million. Daimler will contribute Euro220 million of this amount as a direct foreign investment in India,'' says the release.

Daimler Trucks is a division of Daimler AG and the world's leading truck manufacturer. Its five leading truck brands - Mercedes-Benz, Freightliner, Sterling, Western Star, and Mitsubishi Fuso - generated revenues of Euro 28.466 billion in 2007 on sales of more than 467,667 units worldwide. The Hero Group, founded more than 50 years ago by the Munjal family, is a conglomerate with numerous divisions and products that generate annual revenues of over $4 billion. The company has an excellent network and comprehensive knowledge of the Indian market.