Institutional sources told The Financial Express that Hero Motors has also been approached by foreign manufacturers like Derby, Kymco, Asprilla, Bailem and Pinelli for a scooter manufacturing joint venture.

Hero Motors is planning a major revamp envisaging hiving off its scooter division -- Hero Winner -- into a separate joint venture, according to sources. The company has hived off its engine manufacturing division into a separate 50:50 joint venture company -- Hero Briggs & Stratton.

Transfer of the engine division to the new joint venture is believed to have fetched Hero Motors approximately Rs 20 crore, of which Rs 7 crore is to be added to the company's profitability.

Following the restructuring, Hero Motors will be left with its moped division namely, Hero Puch. The company, however, does not plan to alter its equity structurefollowing the restructuring and will maintain its paid-up equity at its current level i.e Rs 10 crore.

When contacted, R Jinsi, president, Hero Motors, refused to comment on the foreign players.

On the restructuring, Jinsi said the company is still weighing its options regarding whether to hive off the scooter division into a separate joint venture or, to tie up for the entire scooter and moped division.

The combined capacity utilisation of Hero Puch and Hero Winner is 120,000 units per year, which can be enhanced to 150,000 units to 170,000 units. "We plan to enhance our capacity to 200,000 units per year eventually," Jinsi said.

Jinsi further said Hero Motors plans to upgrade the scooter engines from the existing 75 cc to 150 cc. "This will give us further boost with regard to exports," he added.

Significantly, Hero Motors is the largest exporter of scooter and moped in the country. In 1997-98, the company exported over 25,000 units.

According to Jinsi, Hero Motors plans to maintain its exportperformance at a level of 25 per cent of its output. "A possible tie-up may facilitate our endeavour in improving our export performance," he added.

When asked on the motor bike joint venture with BMW, Jinsi said the company has decided to call it off since the market is not matured enough for a high priced vehicle like that.

He said the company plans to concentrate on the low-powered fuel-efficient segment rather than going in for powerful vehicles.