Source : PTI | Hero Electric , an electric two-wheeler manufacturer promoted by Naveen Munjal, has approached existing investor Gulf Islamic Investments (GII) and credit funds to raise around INR 550 cr, as the company fights a working capital crunch that has affected its operations and resulted in loss of market share, according to sources aware of the matter.
According to sources in the know, the company is attempting to raise INR 300 cr from existing backer GII and tie up the remaining funding of about INR 250 crore in form of debt for which it has tapped the credit fund arms of Edelweiss and Kotak. Hero Electric has offered to provide a land parcel in Gurugram as security to potential financiers.
Gulf Islamic Investments declined to comment when contacted. Kotak and Edelweiss did not respond to ET’s queries. Hero Electric did not respond to queries till Press time Friday.
The development comes at a time when Hero Electric has been facing pressure on operations with the Ministry of Heavy Industries (MHI) stalling disbursal of subsidies under FAME II (Faster Adoption & Manufacturing of Electric Vehicles) in FYFY22 after receiving anonymous emails alleging that several firms including Hero Electric were claiming subsidies under the scheme without meeting the Phased Manufacturing Plan (PMP) norms meant to increase indigenisation, investments and employment in the country.
The company has since been found violating localisation guidelines in investigations carried out under the directive of MHI and been asked to refund more INR 100 crore they had wrongfully claimed in subsidies, along with interest. It has denied any wrongdoing.
Naveen Munjal had been engaged in a legal battle with uncle and Hero MotoCorp chairman Pawan Munjal, claiming that his family had exclusive ownership rights of the brand ‘Hero’ for eco-friendly products as per a 2010 Munjal family settlement agreement.
An arbitration tribunal appointed by the Delhi High Court last year dismissed an application filed by Hero Electric for an interim injunction against Hero MotoCorp for using the brand ‘Hero’ for its EVs. The tribunal permitted Pawan Munjal-led Hero MotoCorp to manufacture and sell electric vehicles using the trademark ‘Hero’ but keep revenues from such sales separate till the time the dispute was ongoing.
Hero Electric’s sales of two wheeler EV’s fell to 666 units in October 2023 from 8869 units in October 2022. It was not so long ago a top three player in the EV space but has lost that spot to the likes of Ola Electric, TVS Motor, Ather Energy and Bajaj Auto who currently dominate sales of EV two wheelers in the domestic market.
