Hero Motors puts off scooter project

A Piaggio spokesman meanwhile neither confirmed nor denied Hero was talking to them, but said a number of manufacturers were approaching them.

Our proposed partner has some problems to address now in the wake of the South-East Asian currency crisis which has affected its Asian operations. So we will have to wait for another four to five months at least, the sources said.

If the project gets delayed inordinately, Hero Motors would look for other companies as partners or even venture out themselves, they said. We have to now decide whether to continue with the present company or to look for other partners. We are alsoconsidering going at it on our own, they added.

If the deal comes through, the Rs 196 crore Hero Motors will become the third company to enter scooter segment through a foreign collaboration after LML Ltd and Kinetic Honda.

However, Japanese auto giant Honda pulled out of the Firodias-promoted Kinetic group last year and is reportedly planning to set up their own scooter division in the country.

The other joint venture between Kanpur-based LML Ltd and Italian two-wheeler major Piaggio is reportedly on the rocks ever since the Indian partner moved court to acquire Piaggio’s stake in India’s second largest scooter company after the death of the Italian promoter.

Manufacturer of Hero Winner’ scooterette and Hero Puch’ moped, Hero Motors is yet to capture a substantial market share with its products.

Hero Motors launched the 65 CC Puch’ in 1998 under a technical tie-up with Styer Daimler Puch of Austria, which supplied the design and tools for the moped.

In 1995, Hero embarked on the emergingscooterette sector by launching Winner’ again through foreign collaboration, this time around with Malaguti of Italy.

In the same year, the company also dabbled at assembling and marketing the expensive BMW bikes in India but found there were few takers for the expensive bikes priced over Rs five lakh.

Sources said, as per the original plan, the new joint venture was to roll out two scooters of 125 cc and 150 cc by the year 2000. Engines for the scooters would be sourced from the newly-formed joint venture of the Hero group, Hero Briggs and Stratton Auto Ltd, they added.