Hero MotoCorp is open to acquiring two-wheeler company

Macau: After forging a string of technology partnerships, Hero MotoCorp Ltd. said it is open to acquiring companies, including full-fledged two-wheeler manufacturers, as part of its global expansion strategy.

“We have not stopped our efforts to find technology partners, it is an ongoing process. We are open to acquiring companies,” Hero MotoCorp Managing Director and CEO Pawan Munjal told PTI.

In July, the company acquired a 49.2% stake in U.S.-based Erik Buell Racing (EBR) for $25 million, following a technology acquisition pact last year. Last year, the company formed an alliance with Austrian engine maker AVL to expand capabilities in various segments, in addition to bringing in Italian two-wheeler design firm Engines Engineering as a partner to help develop its next-generation product line.

Asked if Hero MotoCorp is open to acquiring a full-fledged two-wheeler company, Munjal said, “We are not aggressively looking at the moment, but if any target comes up, we will definitely consider it.”

While he did not specify what kind of company Hero MotoCorp would be interested in, Munjal said it was about adding value to the company’s pursuit of becoming a technological powerhouse.

“Money is not the problem, the problem is how to use it well,” he said.

Currently, Hero MotoCorp has cash reserves of about Rs 3,500 crore.

The company also strengthened its research and development (R&D) capabilities after the two-wheeler maker’s Indian promoter, the BM Munjal family, agreed in December 2010 to buy out Honda’s entire 26% stake in their then joint venture Hero Honda for Rs 3,841.83 crore.

After embarking on a solo journey, Hero MotoCorp set itself ambitious goals to expand into global markets. In August this year, the company announced plans to enter 50 new markets by 2020, with a target of 20 manufacturing plants globally and a combined annual turnover of Rs 60,000 crore.

The company has set a goal of selling 100 million bikes in total by 2020, after shipping its 50 millionth bike. The company has set a goal of selling 1 million units per year by 2017 in overseas markets, which would account for 10% of its total sales.

The company announced its foray into the African continent in July, introducing its brand and products in Kenya, where it also set up an assembly unit. A month later, it entered Peru, introducing the “Hero” brand and its two-wheeler range in the Latin American country. PTI