Hero Electric targets 10-15% growth in 20-21, scouts for PE investors

Hero Electric, country's largest electric two-wheeler company, is planning to close the fiscal with 10-15 per cent growth despite the pandemic. The company is looking to increase its capacity by over 200 per cent and is also looking for investors. It is in the process of investing around Rs 700 crore.

Naveen Munjal, MD, Hero Electric told Business that the company is planning to increase its capacity to 250,000 units from the current around 70,000-75,000 units per annum at its Ludhiana facility. The company is also planning to set up a greenfield facility in South India.

While he declined to comment on the size of the new facility, he said, the company is planning to invest around Rs 700 crore in manufacturing over the next 3-4 years. The company is planning to raise funds to back company's proposed investments, he added.

The proposed expansions comes on the backdrop of company's target to sell around half a million units in the next four years. Since its inception the company sold 350,000 two-wheelers.

During the current fiscal, the company is looking at 10-15 per cent growth compared to last year's sales of around 50,000 units. He is confident of achieving the number despite some challenges in supply chains due to various reasons, including the ongoing farmer agitations in Punjab and Haryana.

Munjal said, the adoption of EV will be faster compared to ICE vehicles as people are more concerned about environment, looking at moving away from public transport and within personal mobility, they are also looking at ease of use. The total cost of ownership has always been low, but now the pricing is also very aggressive, in few segments it is closer to the price of ICE two-wheelers and lenders have also started looking at EV segment seriously.

He expects in the next five years, at a conservative level EV contribution in total two-wheeler sales will increased to 10-15 per cent, but if aggressively pushed it can increase to 20-25 per cent from the current one per cent.

Munjal said, during the lock down the company leveraged digital to train its dealers and employees, which started yielding results. Digital sales now accounts for around 25-30 per cent of overall sales.

“Particularly, online bookings during pandemic have been very encouraging, we are now looking at a hybrid model of lead generation and bookings online and delivery through dealer network”, said Munjal, adding that during the pandemic the company conducted over 2,500 programmes for employees. The company also trained over 6,000 roadside mechanics on EVs as part of measures undertaken during the pandemic.

In a bid to address the range anxiety that is common when it comes to adoption of EVs among the customers, Hero Electric has installed around 750-800 charging stations and plans to increase it to 20,000 over the next 2-3 years.

It may be noted that Hero Electric offers modular or portable batteries which can be charged at home. The charging stations is a dense charging infrastructure. A lot of customers don’t actually use it, but it’s solely there to give them comfort — that should they get stranded and run out of charge, this is what they can do. So, it is more of a confidence-building (measure) than anything else, said Munjal, adding that this will not drive profit as it is more to give customers satisfaction and comfort.

Hero Electric is also betting on the B2B segment, which currently accounts for 10 per cent of the total sales and it is targeting to increase the share to around 35 per cent in the next five years.

Hero Electric is India’s largest Electric two-wheeler brand with over 60% of E2W market share from the house of Hero. Hero Electric entered into operations 10 years ago.

Hero Electric is a subsidiary brand under the umbrella of Hero Eco, a global company with interest in the fields of Medical Rehabilitation Equipment, Electric Pedelacs, Bicycles, and Bicycle Components.