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Business News/ Companies / People/  ‘Hero Electric will raise a bigger round next year’
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‘Hero Electric will raise a bigger round next year’

Hero Electric MD Naveen Munjal speaks about the company’s latest fundraise and plans to deploy the capital raised

Naveen Munjal, managing director, Hero Electric.Premium
Naveen Munjal, managing director, Hero Electric.

Hero Electric Vehicles Pvt. Ltd on Sunday said it had raised 220 crore as the first part of its Series B funding led by Gulf Islamic Investments, along with existing investor OAKS. In an interaction with Mint, Hero Electric managing director Naveen Munjal spoke about the funding round and plans to deploy the capital raised, how the domestic electric vehicle (EV) supply chain is developing, the evolving competition in electric mobility and where Hero Electric stands vis-a-vis rivals. Edited excerpts:

Where will this capital be deployed?

Before the second phase of covid-19 in the January-March period, we had a good run rate of more than 9,000 units. However, in the market the demand was well over 11,000-11,500 units, and we were not able to fulfil that demand. Now, we are seeing similar numbers coming back, so this year, our target is double of what we did last year, and over the next four to five years, we want to achieve a minimum run rate of 1 million units annually. We don’t have that capacity right now, so that is where this money will go. Right now, we have a capacity of 75,000 units, which we are scaling up to 300,000 units and that work has already started, and this capacity should come online in the next two to three months.

Will this round help you get to 1-million-unit capacity?

This will help us to 300,000-400,000 units. So, this is a part of bigger things. Possibly, by next year, we will be looking at having another round of investment, which is going to be much larger. That will help us get to 1 million units.

Is the domestic supply chain ecosystem ready for you to deliver that scale?

We are gearing up for larger volumes and so is our supply chain. We are getting a new vendor base in place to cater to that volume. Now, it’s going to become interesting for them (vendors) to actually make those investments to support local manufacturing. We have already been working on localization for the past many years. However, these are things that take time and also the volume we had so far wasn’t large enough to justify very heavy investments in a lot of areas.

The government has the production-linked incentive scheme coming up and there is a lot of push on the localization front. There are already announcements of companies that are interested in making cells and batteries and these will hopefully come on line in the next two to three years. However, in the meantime, we will have to rely on imports for things such as cells.

How is competition shaping up in the electric mobility space?

Competition is certainly coming in strong, and I think this is a better situation because now, suddenly, the pie is going to increase exponentially. So, what was 150,000 units last year is probably going to be about 4 million in the next four years or five years. That’s the kind of number that we a’re looking at. So, competition coming in is always good, because the whole pie grows. We have already got a very strong foothold in the market. We have about 700 dealers. We are building up the charging network and have already installed about 1,600 charging stations. Then, we are also training roadside mechanics to handle electric vehicles and have already trained as many as 6,000 of them. We have got a very strong portfolio of products. We have got the widest portfolio in the country when it comes to electric mobility. We have got five platforms and 13 models on top of that. Beyond that, another very important factor is that we have a very strong brand.

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ABOUT THE AUTHOR
Swaraj Singh Dhanjal
" Based in Mumbai, Swaraj Singh Dhanjal is responsible for Mint’s corporate news coverage. For the past eight years he has been writing on the biggest deals in private equity, venture capital, IPO market and corporate mergers and acquisitions. An engineer and an MBA, he started his journalism career in 2014 with Mint. "
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Published: 12 Jul 2021, 07:42 PM IST
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