Daimler Hero Motor Corporation to set up plant near Chennai

The Hero-Daimler joint-venture commercial vehicles project is coming up in Tamil Nadu – the Daimler Hero Motor Corporation (DHMC) plant will be set up at Oragadam, near Chennai. An MoU to that effect was recently signed between Daimler and the Hero Group.

DHMC will initially focus on medium and light commercial vehicles. The plant will be operational by 2010 and to start with, will have a capacity of 70,000 units per annum. By 2012, the plant is also expected to start making heavy commercial vehicles.

The DHMC project is being set up under Ultra Mega Integrated Automobile Projects policy, which entails significant concessions to automobile projects involving an investment of not less than Rs 4,000 crore in a single location.

DHMC would enjoy total refunds on VAT and CST, 100% exemption from stamp duty, concessional land and concessional power supply. As per the agreement, the company will have to start production within seven years of the MoU being signed, which shouldn’t be a problem anyway, in this case.

DHMC will entail a total investment of about Rs 4,500 crore, with Daimler picking up 60% equity in the JV company, and the Hero Group taking up a 40% stake. In addition to volume-oriented LCVs for the domestic market, DHMC will also develop commercial vehicles – under a new brand name – for the export market. The company aims to have a localization rate of up to 80%, in order to be able to price its products competitively.