Hero Electric, the electric vehicle manufacturing division of New-Delhi based commodity trading house Hero Exports, is looking for a location in the southern part of the country, to set up a greenfield manufacturing facility, a senior company official on said Wednesday.

The plant may soak up a majority of the Rs 80 crore capital expenditure the company has lined up for this fiscal. The facility with a capacity to roll out 50,000 units per annum would be operation by this year.

Managing director Naveen Munjal said, “This plant would be an assembly unit and we would send components from our Ludhiana plant, where we have invested substantially.” Hero Electric currently has 1,25,000 units facility at Ludhiana.

In January last year, the company entered the electric two-wheeler space in partnership with the UK’s Ultra Motors. Since then, Ultra has parted ways with Hero Group and has launched independent operations in the country.

In order to leverage its balance sheet better, Hero Electric is being spun off into a separate company. Munjal said the company plans to meet the capex requirement through internal accruals and debt.

It is also close to acquiring two local companies, which manufacture motors and controllers, at a collective valuation of about Rs 25 crore.

The company sold 21,000 units of electric vehicles last fiscal and targets 70,000 units this fiscal. This year, as an independent entity, it hopes to clock revenues of Rs 170 crore. Breakeven is planned next year, when volumes would reach 1,50,000 units and revenue Rs 370 crore. Next year it would also begin exports.

Rising fuel costs has given boost to the electric vehicle industry. At Re 0.1 per km, the running cost of an electric two-wheeler is under a tenth of a petrol-run scooter.

The current Indian market size is pegged at 60,000 units per annum as against China’s 15 million units. Electrotherm is another big player in the segment. Others such as Kinetic Motors and Tube Investment are also planning to enter the space.

Hero Electric has strengthened its senior management by getting professions on board. It has roped in auto veteran Sohinder Gill as the chief executive officer and appointed Mahesh Patil from GE Auto as R&D head.

Parting ways with Ultra has delayed the company’s electric three-wheeler plans, but the current R&D focus is on technology rather than products. Munjal said, “We are working on hybrid fuel systems and other technology platforms. We are also trying to increase localisation which currently is less than 50%. We have localised mechanical parts and next is electrical and plastics.”

It plans to launch hi-speed electric bikes within a month, which would be followed by two to three more launches.

Source : www.sify.com

Hero Electric, a subsidiary of the Hero Group, said it would invest around Rs 70 crore to expand its electric two- wheeler production capacity at Ludhiana, in view of the current policy incentives.

The company said it would double capacity to 440 vehicles per day on two shifts from the current level of 220 vehicles in a single shift. It would also be launching a new model in the high-speed segment in August. Hero Electric is targeting sales of over 70,000 vehicles this year as compared with 21,000 units sold last fiscal. It plans to expand its marketing network by adding almost 100 more dealers to the existing 170 by 2008-end.

“We welcome these initiatives. The tax benefits will give a much needed boost to vehicles that are not only more environment-friendly but also meet the need of the times. Fuel costs are climbing rapidly making the running cost of petrol driven two-wheelers out of reach for many customers,” said Mr Naveen Munjal, Managing Director.

The Delhi Government has recently announced a 15 per cent subsidy on the base price of the electric vehicle and a 12.5 per cent exemption of VAT. This translates into a subsidy of 24.5 per cent on the ex showroom price of the electrical vehicles. At present, Hero Electric offers four models in the range of Rs 15,170 and Rs 24,600.

Source :www.blonnet.com