The 55:45 joint venture with Bangladesh’s Nitol Niloy will invest $40 m in the next five years

Hero MotoCorp, on Monday, announced its entry into Bangladesh through a joint venture with Bangladesh’s Nitol Niloy. The joint venture, in which Hero MotoCorp will hold 55 per cent stake and Nitol Niloy the remaining 45 per cent, plans to set up a new manufacturing facility with an annual capacity of 1.5 lakh units.

The diversified Nitol Niloy group has interests in various sectors and also markets Tata Motors’ vehicles in Bangladesh.

The two companies plan to invest around $40 million in the next five years in the new venture. This plant will be the first full-fledged manufacturing facility for Hero MotoCorp outside India.

“The commencement of our operations in Bangladesh is a significant milestone in our strategic global expansion plans. In addition to our first overseas joint venture, this is where our first manufacturing plant outside India will come up,” Hero MotoCorp Managing Director & CEO Pawan Munjal said in a statement.

“We are aiming to have around 20 per cent of market share here (Bangladesh) in the first year of our operation,” he added.

Commenting on the development, Nitol Niloy Group Chairman Abdul Matlub Ahmad said the aim of the joint venture was to provide technologically advanced, innovative and fuel-efficient two-wheelers for customers in Bangladesh.

Explaining the investments into the joint venture, the company said there would be a total equity injection of $12.6 million in a ratio of 55:45 over two years.

The new venture will have a capex of $23.2 million in the first year of its operation.

The Hero range of two-wheelers are being made available in Bangladesh through the initial 50 retail outlets, while more are being rapidly added across the country.

Hero MotoCorp at present sells products across 18 countries, including Peru, Guatemala, Turkey and Egypt. It has established assembly units in Kenya, Tanzania and Uganda in East Africa through its distributors.

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