Daimler AG, the world’s largest truck maker, and Hero Group, India’s top two wheeler manufacturer, on Monday unveiled a Rs. 4,400-crore joint venture to build commercial vehicles in New Delhi.
Daimler Hero Motor Corporation Ltd., the joint venture company, plans to hit the Indian market by 2010. The collaboration comes at a time when a booming economy is driving truck sales in India. The joint venture plan was announced in December, but the details of the engagement were worked out later and unveiled on Monday.
Hero group will hold 40 per cent equity in the joint venture, while Daimler will have the remaining 60 per cent stake. The German company would invest Rs.1,386 crore in equity, while Hero group would be putting in Rs. 900 crore to take 40 per cent stake. Overall investment by both the companies through equity and debt is estimated to be Rs. 4400 crore.
Marc Llistosella, who directed the joint venture project from the Daimler side, will become chief executive officer of the Daimler Hero Motor Corporation. Amit Chaturvedi, currently president, strategy and business development at Hero Corporate Service Ltd. and project leader from the Hero Group, will serve as co-CEO. Sunil Kant Munjal will be the chairman of the new company.
The company will initially focus on light and medium commercial vehicles. Heavy duty vehicles will be produced from 2012. The new company is aiming to achieve a localisation rate of up to 80 per cent in order to optimally utilize cost advantages. The production of commercial vehicle for export to other emerging markets will also be launched thereafter.