Domestic motorcycle market leader Hero Honda Motors on Monday said it would foray into scooter manufacturing and launch two motorcycle models this fiscal.

"We have decided to place scooter in our model line-up. Out of the two proposed motorcycles, one will be on the new platform which we are developing," Hero Honda Motors managing director Pawan Kant Munjal said on the sidelines of a news conference in New Delhi.

Also Read Hero Honda net zooms 25% in 2003-04

Asked about the details of the upcoming scooter, he said: "It will be a little early to talk about specifications".

Both the motorcycles will be above 100cc capacity and the one will be launched in October-November while the other in February-March.

India's largest motorcycle maker, in which Honda Motor Corp. of Japan and the Munjals hold 26 per cent stake each, is also in the process of developing a new engine platform. One of the two upcoming motorcycles will be manufactured on the new platform.

Hero Honda's foray into scooter market assumes significance in the wake of its joint venture partner Honda's wholly-owned subsidiary, Honda Motorcycle and Scooter India, entering the motorcycle market this year.

At the time of establishing its 100 per cent subsidiary, Honda and Hero Honda Motors reached an agreement that Hero Honda will not make scooters till 2004 while HMSI will not enter motorcycle market this year.

Now, HMSI is readying itself to launch a motorcycle this year.

With Honda setting up a wholly-owned Indian unit, both Hero Honda and Honda Motorcycle Scooter India entered into an agreement that the joint venture firm would not enter scooter market while HMSI would not plunge into the Indian motorcycle market till 2004.

Till date, HMSI has been manufacturing three scooter models in the country, which have been a runaway success and helped revive the domestic scooter market. But now, HMSI has announced its plans to introduce a motorcycle this year.

However, both Hero Honda and HMSI said the product range of the two companies would compliment each other.

"We will together (Hero Honda and HMSI) try to grab 50 per cent of the Indian two-wheeler market," Munjal said.

The Hero group's agreement with Honda of Japan would definitely be renewed, he said adding, "It is just a technicality."

Hero group and Honda had a 10 year agreement for the joint venture -- Hero Honda -- till 2004. So far Hero Honda is the most profitable Honda joint venture in the world.

He said Hero Honda's margins had been under strain due to rising input costs, especially steel.

Operating margins stood at 15.56 per cent during 2003-04 against 15.52 per cent during the previous year.

Munjal ruled out any price hike in the near future.

Hero Honda Motors, which launched five motorcycle models last year, attributed the four per cent rise in market share to the new launches.

"We have ended the year with an undisputed leadership in the entry and executive segments -- the core of the Indian motorcycle industry," Munjal said.