Hero Electric looks to raise nearly Rs 2,000 crore to drive expansion

The company is not looking for mergers and acquisitions, but is open to having a strategic investor who can bring some technical expertise

Hero Electric is in search of strategic or financial investors to raise nearly $250 million (around Rs 2,000 crore) to fund its expansion plans, a senior company executive said.

“We are looking at raising close to $250 million by September this year. For this, we are open to having on board either a financial investor or a strategic investor who can bring some technical expertise,” Sohinder Gill, CEO, Hero Electric, told Business Standard.   

He said the quantum of stake dilution would depend on valuation. India’s oldest two-wheeler EV maker is not looking for mergers and acquisitions.
 

After witnessing its highest-ever annual sales of over 100,000 units in the calendar year 2022, Hero Electric is getting “future-ready”. It is upping capacity at its Ludhiana plant, which currently can manufacture 100,000 units per annum.

Last July, Hero Electric began manufacturing the Optima and the NYX ranges of e-scooters from Mahindra and Mahindra’s plant in Pithampur, Madhya Pradesh.

In September 2022, it signed a memorandum of understanding with the Rajasthan government to set up a mega EV manufacturing hub, with an annual production capacity of 2 million units, at Salarpur industrial region. This facility would be spread over 170 acres and is expected to start commercial production by the end of 2023. An investment of Rs 1,200 crore is planned for the facility.

According to Gill, the company would soon come out with four new models. Currently, the company’s product portfolio comprises seven electric scooters -- Photon LP (top speed 45 kmph), Optima CX (single-battery and dual battery variants), NYX HS500ER, and three city runabouts -- the low-speed (25kmph) NYX E5, Atria LX, and Eddy.

Besides boosting manufacturing, Hero Electric is expanding its sales network (700 outlets now) and EV charging network. It now has a customer base of over 600,000 in the Indian market.

Hero Electric has also tied up with Japan’s Nidec to source electric motors. Nidec’s motors would be fitted in Hero Electric’s e-scooters from early 2023.

As demand for electric vehicles is on the rise, several EV players are on a fundraising spree.

Last year, Ather Energy raised $128 million in a funding round led by sovereign wealth fund National Investment and Infrastructure Fund and existing backer Hero MotoCorp, which invested nearly $56 million in that round.

The money would be used by Ather Energy to expand manufacturing facilities, invest in research and development and charging infrastructure, and grow its retail network.

The electric two-wheeler market crossed the 600,000-unit sales target and achieved a market penetration of 4 per cent in CY22. This was up 300 per cent from the previous year.

Ola Electric, Okinawa Scooters, Hero Electric, and Ampere EV by Greaves hold 60 per cent of the total electric two-wheeler market in the country.