Hero Motors on Thursday announced an agreement with the Austria-based Bombardier-Rotax, which will provide 125-175cc engines for the upcoming Hero Aprilia range of scooters entailing an initial investment of Rs 200 crore (Rs 2 billion).
"We will source four-stroke water-cooled 125cc and 175cc scooter engines from Bombardier-Rotex for Hero Aprilia scooters, to be launched in May 2005," Hero Motors managing director Pankaj Munjal told a news conference in New Delhi.
Besides the transfer of scooter engine technology from Bombardier-Rotex to Hero Motors, the Austrian firm would source auto components from Hero Motors and provide total quality management support to the Munjals-owned company.
The size of the sourcing deal would be to the tune of $90 million, he said.
Bombardier-Rotex will source engines from Hero Motors for low displacement engines as manufacturing low-powered engines were not cost effective for Bombardier, Bombardier-Rotax general manager Yves Leduc said.
Hero Motors will launch two four-stroke scooters -- 125cc and 175cc -- in May next year for which the company has inked a deal with Italy-based Aprilia for bodies while the scooters will be fitted with Bombardier-Rotex engines.
Asked how much royalty Hero would pay to Bombardier, Munjal said: "We are well within the RBI guidelines," declining to give details.