India's largest two-wheeler maker Hero Honda is learnt to be in talks with Maharashtra government to set up a large manufacturing base in Aurangabad.
This would be Hero Honda's first facility outside north India and is being perceived as a step towards improving its show in the western markets where Bajaj Auto, India's second-biggest two-wheeler maker and main rival, has its main base.
Hero Honda, which recently ended its joint venture with Japan's Honda, plans to buy 800 acres in Aurangabad in the estate of the Maharashtra Industrial Development Corporation (MIDC), sources said. "Hero Honda has got the government sanction on February 1 for the same. The company may set up a manufacturing unit in Aurangabad," a person close to the development said.
HT could not independently verify the price of the 800 acres in the Aurangabad MIDC or the total investment the company plans. However, a person involved in the development said, "One condition for Hero Honda would be to recruit at least 30% locals in the factory."
The company had approached Maharashtra authorities for its facility, sources said.
A company spokesperson neither denied nor confirmed the development. "We are yet to take a final decision on the location of our proposed fourth plant as we are still evaluating various locations. Therefore, it is premature to share our capacity plans and quantum of investment at this time," a spokesperson said in an emailed response to a questionnaire sent by HT.
Hero Honda with its three plants and 5.5 million annual production capacity needs more factories to address emerging demand. The company, which has sold 4.4 million two-wheelers in the last 10 months, is operating at full capacity. It currently has three manufacturing plants in north India and has been eyeing a fourth one.