Daimler, Hero to invest Rs 4,400 cr in JV

New Delhi: World's largest truck maker Daimler AG and India's Hero group on Monday said they will invest Rs 4,400 crore in the next five years through a joint venture to develop and manufacture commercial vehicles in India by 2010.

The two companies have signed a joint venture agreement in which the German partner will have 60 per cent stake and the rest will be with the Hero Group in a company named Daimler Hero Motor Corporation (DHMC).

As a part of the agreement, Daimler will invest Rs 1368 crore while the Hero Group will put in Rs 900 crore.

"This joint venture will first focus on light and medium commercial vehicles which will be developed with specific Indian conditions in mind to be launched by 2010. By 2012 it will roll out heavy commercial vehicles," Daimler Trucks Head Andreas Renschler told reporters here.

Currently, the partners are scouting for a location to set up a greenfield plant.

"We have identified three locations-Haryana, Chennai and Pune. In another four to six weeks time we expect to finalise the location," Hero Corporate Services Chairman Sunil Kant Munjal said.

The plant will have an initial production capacity of 70,000 units and will be scalable in future, he added.

The joint venture aims to have a localisation level of 80 per cent when it starts entering the Indian commercial vehicles market by 2010.

Renschler said although Daimler already has a commercial vehicles operation in India in the form of Mercedes Benz India, which imports the Actros range of off-road mining trucks, the JV with Hero will be responsible for products that are specifically developed for the Indian market and exports to other emerging markets.

"Any import of existing products to India from Daimler's portfolio will go to Mercedes Benz India and the JV will develop new products for the Indian market," he added.

He said as Daimler already has a research and development centre in Bangalore, the JV should be able to leverage from it.

Asked about the intended spend on R&D, he declined a direct comment but said it will be significant.

Renschler also said Daimler had no plans to exit from Tata Motors, where it has 6.6 per cent stake although it will "see" on how to go about the 3.6 per cent stake in Eicher Motors.

"We will continue to be a financial investor in Tata Motors," he said.