Hero Electric to go ahead with expansion plan amid slowdown
MD Naveen Munjal told ET that although sales of electric two-wheelers were subdued in the first half of this financial year, the company expects demand to pick up substantially in the coming years as legacy players such as Bajaj Auto enter the seg
New Delhi : Hero Electric has decided to go ahead with its planned investments in capacity expansion programmes despite the prevailing demand slowdown in the domestic market. Managing director Naveen Munjal told ET that although sales of electric two-wheelers were subdued in the first half of this financial year, the company expects demand to pick up substantially in the coming years as legacy players such as Bajaj Auto enter the segment.
Hero Electric plans to invest Rs 700 crore over the next three years to develop new products, expand dealer network and increase production capacity to retain leadership position in the segment. The resources will be raised through a mix of internal accruals and external capital. “To start off, the first few months were kind of slow because of the new policies which came into play… the new homologation norms (under Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India or or FAME-II scheme). But now we are back on track. We will grow (over last financial year),” said Munjal. The entry of mainstream two-wheeler companies such as Bajaj Auto is a positive development and bodes well for the segment, said Munjal. “Larger players coming means that the time has come, or is coming, for the internal combustion engine (ICE) two-wheelers to start converting. When you talk of ICE converting, you are looking at 20 million units converting over a period of time. Now it is anybody’s guess whether it will happen in five or 10 years but the market will start to expand very, very quickly,” he said.
To cash in on future opportunities, Hero Electric, which has a single manufacturing facility in Ludhiana, has started scouting for locations to set up a second unit in the country. Its Ludhiana plant can produce 80,000-90,000 units per annum.
Munjal said his firm is undeterred by the government’s decision to put on the back burner complete electrification of two-wheelers with less than 150 cc power by 2023. “We are not basing our business models on policies at this point. Policies will change. What we are looking at is does it make economic, commercial, environmental sense for consumers to switch to electric. If you look at the pollution levels, it absolutely does,” he said. Around 52,000 electric two-wheelers were sold in India between April and September this year. Hero Electric accounted for nearly half the sales, said the company.
Source : economictimes
