After tantalising Telangana, Hero vrooms into CM's Chittoor

HYDERABAD: In the race to woo a prestigious first investment in the manufacturing sector post-division, Telangana has lost to Andhra Pradesh. After scouting, both Andhra Pradesh and Telangana to set up their proposed sixth greenfield twowheeler plant, Hero MotoCorp has finally favored the former. The Andhra Pradesh cabinet, which met here on Monday morning, approved the project and allotted 600 acres of land near the Sri City SEZ in Chittoor district.
The company is to invest about Rs 2,200 crore in phases in the plant which would provide employment to 5,000 people, both direct and indirect. “Surplus power, adequate water, proximity to Chennai and Bengaluru coupled with political stability tilted the scales in favour of Andhra Pradesh,“ Parakala Prabhakar, government's advisor (communications), told TOI after the cabinet meeting. However, Telangana countered it saying that their's is a better location. “We did our best. However, it is ultimately the company's decision.We still believe that Telangana is the better location for the plant,“ Telangana industries and commerce principal secretary Pradeep Chandra said.
“A MoU is to be signed between AP government and Hero MotoCorp on Tuesday ,“ Prabhakar said, adding that it is going to be one of the many agreements that are slated to be signed on Tuesday .
Analysts, however, warned about reading too much into the decision as an indicator of the investment climate in both the states.Monday's cabinet decision was the culmination of intense efforts by the Andhra Pradesh government to persuade the two-wheeler major of the county to locate its facility in Chittoor, which incidentally is chief minister Chandrababu Naidu's home district. The deal was struck on Saturday when Hero MotoCorp vice-chairman, MD and CEO Pawan Munjal called on Naidu when the latter was in Delhi.
In fact Munjal, who wanted to set up aplant in south India, has been in touch with both the state governments for the past two months. Initially , Telangana appeared to have the edge. In June, Te langana chief minister K Chandrasekhar Rao received a delegation of the company led by Munjal and head of operations Vikram Kasbekar.
In the meeting, KCR promised to extend all facilities to the company in the proposed National Industrial Manufacturing Zone in Medak district. A team of company's executives also visited Zaheerabad as well as a site near the Outer Ring Road on the outskirts of Hyderabad. Telangana officials were hopeful that Hero would zero in on Medak district as the tractor unit of Mahindra and Mahindra is already located in Zaheerabad.
Later, Chandrababu Naidu began his efforts to get the two-wheeler major either to Visakhapatnam or Chittoor.Finally , the proximity of the Sri City location to automobile hub Chennai as well as Bengaluru and other factors appear to have swung the deal in AP's favour. At present, Hero MotoCorp has three manufacturing facilities -at Gurgaon and Daruhera in Haryana and Hardwar in Uttarakhand -with a total capacity of 6.9 million units annually .The plant in AP can produce about 1.8 million vehicles annually .
The company has planned two more manufacturing facilities a fourth facility at Neemrana in Rajasthan with an investment of around Rs 400 crore, and a fifth one in Halol, Gujarat, with an outlay of Rs 1,100 crore.