'100% sure law will be on our side', says Hero Electric CEO Sohinder Gill

Hero Electric is one of the prominent names in the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles (FAME) subsidy default investigation of the Centre. SOHINDER GILL, chief executive officer, Hero Electric, in conversation with Nitin Kumar, says a year may have been lost, but it’s a learning nonetheless. Edited excerpts: 

Hero Electric is in the Ministry of Heavy Industries’ line of fire over FAME subsidy default for localisation issues. Why is the resolution taking longer?

A solution is close at hand. Directionally, whatever has been the solution given by the ministry in other cases has broadly been the direction our solution will be leaning on. This is on the basis that the policy cannot be seen as cast in stone; it has to be flexible with practical difficulties on the ground.

You said you have never misrepresented your localisation and submitted it to the government. So the ministry knew about your stand all along and it was duly signed by it as well?

It was duly signed, certified, and stamped. When one shows his stamps and gives proof and the other parties show some executive signing the order, it becomes an issue of law. It may enter litigation as well. We are 100 per cent sure that the law will be on our side. As a company, we would never take the litigation route until other options have been exhausted. While we are on the right side of law, we would rather not take a rigid view.

How are you planning to deal with this issue — internally and externally?

Luckily for us, my team, my network, my workers, and existing investors are on the same page because they understand how it happened, why it happened, and perhaps who has done it.

This is why our team is still intact, our network is intact, the supply chain is perfectly in place, and our bankers are trying to support us. But under the rules, their hands are tied.

But people have started to understand that it’s an industry problem. 

Hero Electric’s sales in April declined 75 per cent since the all-time highs of March 2022. Sales declined 50 per cent since January 2023.

When we look at the past, notwithstanding all these problems since April 2022 when localisation was received by the ministry for a whole year until March 2023, we were passing on subsidies to every customer with our internal resources.

We must have paid Rs 600 crore to customers. When the financial year ended, we had already launched a new series of models hoping the resolution would come and we would have products that would be the best in class.

The planning got delayed because more original equipment manufacturers were added to the investigation.

We have given orders for 200,000 vehicles. With a solution close at hand, we are reviving production. If the solution comes soon, I think the NITI Aayog’s target of 2.3 million for this year can still be achieved. We can touch a target of 1.8-2 million if it is business as usual

We have only lost a year, but we have got a larger perspective of achieving our goal as a nation.

Are you looking for a solution which has you agreeing to pay the government for the period you were not able to adhere to localisation norms and get a subsidy for the remainder period?

Not really. If you go into our Central Motor Vehicle Rules certification, we have always seen to it that facts are not distorted. We did not mention localisation of products in our certificates between 2019 and 2021.

But time is money. We have lost Rs 600 crore by now. For us, each day means no production, with labour and bankers sitting idle.

We are talking of a practical solution and not digging our heels in saying ‘we don’t have to pay you a rupee.

Are you ready for a common solution?

Yes, of course.