Proton, Hero rev up talks

Proton Holdings Bhd (5304) is intensifying talks with India's largest motorcycle outfit Hero Group which once wrapped will enable the carmaker to garner a larger slice of the world's second most populous nation.

An industry source said talks are progressing well and it is being speeded up so that it can be finalised soon.

Both parties, however, have mutually agreed not to disclose details of their negotiations to the media.

The highly placed source was denying rumours that talks betweeen the two parties which started six months ago have broken down or stalled.
Last October, Proton managing director Datuk Syed Zainal Abidin Syed Mohamed Tahir confirmed that the carmaker was in talks with several automotive groups from India which include the Hero Group to enable Proton to produce cars in the subcontinent.

He said both parties are working towards the best approach in their alliance which will pave the way for the setting up of a joint-venture company, of which Proton will own 49 per cent and the Hero Group 51 per cent.

He said under the joint venture, Proton will either roll out a car carrying their joint brand names or market the Proton national car in India.

Hero Group turns in a revenue of US$4 bilion (US$1 = RM3.41) a year and is one of the world's largest motorcycle makers.

Meanwhile, in a research note, TA Research said Proton is expected to announce its cooperation with a global company this March.

"Proton is in talks with an unidentified party for the last six months. Our source has revealed that it will announce results of the tie-up any time soon," said TA Research.

It added that the venture will not involve a big investment and will be on technology collaboration and dealers network.

TA Research said total industry volume in Malaysia is about 500,000 units a year which limits Proton to command a bigger market.

"Thus, it is necessary for Proton to tap into the Indian market after forging a deal to enter China's market via its agreement with the Youngman group of China," said TA Research.