Hero Electric looks to double capacity.

Hero Electric, one of the largest electric scooter makers in India by sales, plans to double capacity over the next 12 months. The company is eyeing expansion either at its Ludhiana unit or may explore setting up a greenfield one in South India.

Hero Electric, a subsidiary of Hero Eco Ltd., has an annual capacity of 75,000 units at its Ludhiana facility, which will be increased to 150,000 annually.

According to Sohinder Gill, CEO, Hero Electric will invest ₹700 crore over the next three to four years as capex. Of this, nearly ₹250-300 crore will go towards capacity addition.

“We can look at brownfield expansion at Ludhiana or go for a greenfield unit down South. We are exploring all the five (Southern) States and a call on this will be taken soon,” he said on the sidelines of the launch of its electric scooter range.

Around 65,000 electric two-wheelers were sold in India in FY19, of which 37,000 were sold by Hero Electric alone.

“We have seen sales nearly double over the last six months and we now have a 65 per cent market share,” Gill said. The company is also eyeing an increase in dealerships.

While Hero Electric remains bullish on the demand for electric two-wheelers, sales of e-scooters have been slow especially since the Centre introduced tight localisation norms to avail of benefits under the Faster Adoption and Manufacturing of Electric and Hybrid Vehicles (FAME-II) scheme.

Finance Minister Nirmala Sitharaman in a bid to push sales and also aid manufacturing, had recently announced customs duty exemption on lithium–ion cells, which will help lower the cost of lithium-ion batteries in India as they are not produced locally. Makers of components such as solar electric charging infrastructure and lithium storage batteries and other components will be offered investment-linked income tax exemptions under the Income Tax Act, and other indirect tax benefits.

HBL