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Hero Electric Will Go Public
Hero Electric aims at expanding its market share, it strategizes to reach a target amount of 2 million before listing.
The CEO of Hero Electric, Sohinder Gill, said, “Hero Electric is planning to go public by FY26”
The electric two-wheeler manufacturer, Hero Electric is planning to get publicly listed in the Indian stock exchanges in the coming two years. said its CEO to Business Standard.
“This (Listing) is an inevitable step, but it has to have a run and time of its own. When we reach two million unit sales, that is the time public offerings are better. We believe in proving and then drawing a track record, and it will come in two years.”
said the Chief Executive Officer, of Hero Electric, Sohinder Gill.
To propel the extraordinary expansion requires to accomplish the target of 2 million, is relying on the capital expenditure (Capex) light model in business and products in addition to fundraising. The company aims to secure funding from a combination of equity and debt sources.
The company had plans to raise an amount of Rs. 2000 crore by September but however, due to the localization probe conducted by the Ministry of Heavy Industries, the deadline has been pushed to a full year now.
Words by the CEO
To this Gill adds,
“Our Strategy is to wait for this stigma and negativity in the market to improve. We don’t want to waste the valuation of the current state of the cloud. We should be out of it, and then we get what we deserve.”
As of now, Hero Electric has successfully raised a total of Rs. 380 crore in funding. In December, the company conducted its first fundraising exercise, securing a total of Rs. 180 crores in investment. Hero Electric recently sold a minority stake to Alpha Capital Advisors through an equity sale. To add to this in July 2021, it raised Rs 220 crores in a series B funding from Gulf Islamic Investments LLC.
The company attracted controversy and came under the critic’s eyes after when it failed to comply with the Faster Adoption and Manufacturing of (Hybrid) and Electric Vehicles (FAME II) scheme’s Phased Manufacturing Programme (PMP) regulations and guidelines.
In April, the ministry came to a reasoning that Hero Electric and Okinawa Scooters have been heavily dependent on imported parts- this was a clear violation of the PMP guidelines.
The government asked the company to reimburse Rs. 133 crores it had claimed as subsidies since 2019 and deprived it of future FAME incentives.
The ministry also suspended subsidies amounting to 600 crores that had been pending since September 2022.
However Gill says,
“The company might think of taking the amount as a liability if worse comes to worst” He is optimistic that a solution is imminent.
Gill says that as soon as the government releases the barred subsidy of 600-700 crores everything else will fall into place. The Rs. 2000 crore will be reduced as the company has taken on a capex-light model leveraging its strategic partnerships and dedicated investment.
“Our production capacity is acceptable; new models are already out, and two new models will roll out next year. With a five-model line-up, the investment in models is gone, and the investment in capacity is already lined up. What else do I need? I might need funds for working capital, marketing, and research and development in the future, but they can wait a few months more. ” says Gill.
Hero Electric has a production capacity of upwards of 20,000 vehicles. Last year, it forged a partnership with the Mahindra Group to secure an additional 200,000 units. Gill also adds, “The company will also start construction on its Rajasthan plant which will purposedly have a production wherewithal of 1.3 million to 1.5 million units.
When asked about the decline of more than 75 percent in sales in April since the record high in March 2022, Gill said it is a “planned absence from the market.”
Gill also added,
“We have started the production, but it is not felt in the market as our market share is going still down. We have a run of a few months to prove that we can come back even stronger than before and then command and demand what we deserve. This brand for more than a decade-old presence and this kind of strength and its customer base get best of valuations. “