Swaraj Baggonkar Moneycontrol News
Hero Electric, the country’s largest two-wheeler manufacturer, has raised Rs 160 crore in its first ever fund raising exercise, through equity sale, to chart its future growth.
The Delhi-based company has off-loaded a ‘significant minority stake’ in the company to Mumbai-based investment management firm: Alpha Capital Advisors. The privately held Hero Electric declined to specify the size of stake sold.
The management intends to set-up a new factory, diversify its product portfolio, acquire new technology as well as boost its R&D capabilities with funds.
“Part of the funds will be used in setting up manufacturing facilities, marketing purposes, new products and R&D. We are setting up a new plant in the south. We already have a facility in Ludhiana, but logistics costs in moving products to the south is very high. We already have a warehouse in Hosur, Tamil Nadu and it makes sense to have a manufacturing plant also there,” Naveen Munjal, Managing Director, Hero Electric, said.
The company is more than doubling production capacity to 2 lakh units in wake of a continued surge in demand for electric two-wheelers in the domestic market since the past two years.
The plant in Tamil Nadu is one of the several plants it as planned over the next five years, which is aimed at doubling sales every year. Unlike some start-ups such as Hero MotoCorp-backed Ather Energy, which is focusing on premium and powerful scooters, Hero Electric is banking on India-centric, flexible and cost-effective innovations that will drive the growth of electric mobility.
Last year, Hero Electric clocked sales of 30,000 units. It crossed that level in September and hopes to end the year at 50,000 units. Next year, the company is targeting sales of 75,000-85,000 units. Part of the reason for the consumer shift to electric can be attributed to the continued surge in the price of petrol.
The surge comes despite the company nearly doubling the average price of its products during the last 12 months. Hero Electric said it switched from low speed lead acid battery technology to high speed lithium ion batteries this year.
Earlier this year, Hero Electric unveiled a line-up of its global products in India. It now plans to launch more key products in a phased manner. Over the past decade, Hero Electric has launched 15 electric two-wheelers in India. With 45 percent share of the country’s electric two-wheeler market, the company leads in its segment.
“We are taking the capacity to 75,000 a year by March next year and are going to set-up another 1 lakh units a year in the south. We can take the total capacity up to 2 lakh units by end of next year,” Munjal added.
Construction of new plant in the south shall begin in early next year, while expansion at the Ludhiana plant has already begun.
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