Hero Cycles Ltd has acquired a majority stake in Sri Lanka-based bike exporter BSH Ventures Ltd. With this move, India’s biggest bike maker Hero wants to take advantage of the benefits associated with Sri Lanka regaining the GSP+ import duty free status. This allows for Sri Lankan made bikes to be imported duty free in the EU member states.
“We have bought a 60% stake in BSH Ventures. This move is to strengthen our efforts to emerge as a key bicycle exporting company to the hi-end EU markets from South Asia,” commented Pankaj Munjal, Chairman & MD of Hero Cycles Ltd at last week’s India Int’l Cycle, Fitness & Outdoor Expo in Ludhiana.
In an exclusive interaction with Bike Europe at the show Hero MD Munjal emphasized that the acquisition of the Sri Lankan company is a part of the Hero Cycles strategy to further expand its global footprint. Next to that Hero will be spurred to this take-over by the fact that Sri Lanka is about to regain its import duty free status for bikes exported to the European Union. This safes 14% import duty on Sri Lanka made bikes that are imported into the EU member states.
Neven Mimica, European Commissioner for International Cooperation and Development said last week in Colombo, Sri Lanka that the country is on the right track to regain trade preferences granted to the country under EU’s Generalizes System of Preferences (GSP). The EU Commissioner stated also, “We will work together with Sri Lanka for an early application. The approval process for GSP+ takes about 10 – 12 months. The process is on track and a meeting will take place in April when a delegation from the EU comes to Sri Lanka.”
When asked about the financial details of the deal, Munjal declined to comment. But he said that further investments in the BSH plant will be made in order to hike the production by about four times in a three year plan. “We would likely to invest to the tune of about US$ 15 million to raise the plant capacity from the current 250,000 units to 1 million units.” (Bike Europe)