Honda buys land for fourth unit in Gujarat

Honda’ two-wheeler division, which has manufacturing units to produce its range of scooters and motorcycles in India, has recently purchased another plot of land for installation of new production unit in Gujarat. The Honda Motorcycle and Scooter India firm, which acquired 200 acres of land near proposed plant of Maruti Suzuki, will be investing INR 1000 crores on setting up this manufacturing plant, which will be its fourth unit in India. The firm has also filed a Memorandum with union ministry officials seeking permission to manufacture both scooters and scooterettes at this location which will be sold in domestic markets and also may be exported depending on demand.

Gujarat’s Industrial Promotion department has also stated that the firm has purchased land and its business proposal to start manufacturing two wheelers at this location has also been cleared at secretariat level. Honda’s management is awaiting approvals from State Support Agreement and state cabinet after which it will start necessary ground breaking ceremonies before staring construction for this manufacturing unit. As per records available with government agencies the automobile maker has paid INR 15 – 20 lakh per acre for acquiring the land which is located in Hansalpur region in Gujarat almost adjacent to proposed plant of Maruti Suzuki. The details about amounts paid and products to be manufactured in this unit have not been affirmed by Honda though it is learnt that the firm was seeking land in the region.

Honda has evaluated other locations before finalizing on the Gujarat proposal due to state government offered assistance in terms of tax refunds and waivers. The firm had initiated discussions with State government employees during last year and finalized location and other details to start the manufacturing unit. Gujarat government has offered incentives and waivers on stamp duties, registration fees and other forms of support to the Japanese automaker which will be employing local talent and investing nearly 1000 crores in this project. Other manufacturing units of Honda are located in Manesar at Haryana, Tapukara in Rajasthan and Narsapura in Karnataka. The total capacity of its production units across India is nearly 4 million units annually comprising both motorcycles and scooters.

Honda Motors and Scooters India is aiming to increase its sales by 43 percent for the financial year of 2013-14 therefore its marketing and sales team will have to increase their total sales from 2.75 million units achieved last year to 3.93 units this year. To meet growing demand for different categories of two wheelers the firm is planning to increase capacity of its existing plant in Narsapura by 600,000 units which will enable it to produce nearly 1.8 units annually from 2014. This proposal will help the firm more than double its existing overall production capacity and increase it by nearly 64 percent. Honda is making an all out effort to overtake Hero Motors as the largest two wheeler manufacturer in India. It was able to overtake Bajaj Auto Ltd in 2012 to gain ranking as India’s second largest two wheeler manufacturer therefore with growth of capacity and increase in number of sales network and dealership.