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Hero Electric Vehicles has announced that it will invest Rs 700 crore by 2025 to rev up its business expansion. Its plan includes setting up of a new manufacturing unit, for which it has raised Rs 220 crore to part-fund the activities.
The new manufacturing facility will have an annual capacity of 10 lakh units. Besides, the company will also increase production at its current plant at Ludhiana to 3 lakh units per annum from 75,000 units at present, as it targets to sell around 10 lakh units a year by 2025-26.
The company is also ramping up research and development (R&D), marketing, dealer network expansion, along with expanding its supply chain, service network and charging stations in order to cash in on the ‘explosive growth’ in demand for its electric two-wheelers.
For funding these activities, the company has raised fresh capital in the form part 1 of Series B funding of Rs 220 crore, led by Gulf Islamic Investments (GII).
Hero Electric Managing Director Naveen Munjal said – “What we’re doing now is expanding our capacity from 75,000 units to about 3 lakh units. While we are building this up, we’re also planning on the next facility which is going to be about a million units per year and that we believe is not very far off now. It’s going to be sooner rather than later. Over the next couple of years, up to about 2025, we anticipate around Rs 700 crore to be invested in these facilities. That’s the bare minimum that we will be spending in these facilities now. “We will have to go for another (round of fund-raise) which is going to be much larger… we will raise again, possibly next year and that will be again for even further expansion in terms of manufacturing and market.”
Munjal also mentioned that Hero Electric is getting ready for exponential growth in sales that it expects going forward, with the FAME II scheme increasing support for electric two-wheelers thereby accelerating demand.
He said – “In 2019-20, pre-COVID time, we had sales of about 46,000 units. In 2020-21 despite the disruptions due to the first wave of COVID-19, we sold about 54,000 units. This year we’re targeting 100,000 units… We are at a run rate to be able to fulfil that kind of number this year. Overall, in the next five years between 2025 and 2026, we’re looking at sales of a minimum of a million units per annum.”
GII Founding Partner and Co-CEO, Pankaj Gupta said – “Hero Electric has established itself as a champion in the country’s electric vehicles segment and is exceptionally well positioned to achieve multi-fold growth in the coming years.”