Hero Electric plans overseas acquisition

Electric bikes manufacturer, Hero Electric is in talks with some foreign companies that make electric motors and controller components for battery-powered two-wheelers. Of these three or four, Hero Electric wants to acquire one company.

At present, Hero Electric is sourcing motors, controller components, batteries and battery chargers for its e-bikes from China. Once it acquires a company that makes all these things, Hero Electric will be in a position to stop importing parts from China.

The company is happy with the response it’s getting for its electric bikes, and will be investing Rs 80 crore towards capacity expansion, setting up an R&D centre in Ludhiana, and ramping up its dealer network. ‘Presently, our e-bike manufacturing capacity is 220 units per day, per shift, which is expected to reach 440 units per day, per shift after two years. Besides, we also plan to expand our dealer network to 300,’ says Vijay Munjal, Chairman, Hero Electric.

Hero Electric aims to sell 70,000 units of its e-bikes this year, of which 25,000 units are targeted from southern India, which is a big market for e-bikes. The company expects sales of e-bikes to grow by around 200 percent in 2009.

To better manage growth, Hero Electric, a subsidiary of Hero Exports, will soon be hived off as a separate company. ‘We are in the process of hiving off Hero Electric Devices Private Limited as an independent company and it will be done soon,’ said Vijay Munjal.

Hero Motors to diversify into aviation biz

In what could be a very significant move for the company in the years to come, Hero Motors is looking at diversifying into the aviation business – the company plans to start making a range of small, light aircraft. Hero Motors is said to be looking at acquiring land in Jaipur, where it will set up a new facility for making aircraft.

Hero Motors’ foray into the aircraft manufacturing business would be a JV with an American company, which would bring its technical expertise to the venture. Hero Motors will start with small, leisure aircraft meant for individuals. These may cost no more than Rs 70-80 lakh. Later, the company may move on to making bigger aircraft as well.

Apart from making light aircraft, Hero Motors will also undertake aircraft repairs and maintenance, and the company will have its own airstrip for testing airplanes. And taking things forward, Hero Motors will then look at setting up a flying school which would provide high-quality instruction to aspiring pilots.

India lacks high-quality flying schools and Hero Motors wants to set up world-class infrastructure for Indian pilots, so people would no longer need to go to expensive foreign institutes.

Hero Motors to make CNG kits for automobiles

With the rise in petrol and diesel prices, CNG is one cheaper alternative for car owners right now, and demand is skyrocketing. Seeing a quick business opportunity, Hero Motors is planning to start making CNG kits for cars. These kits will be made at Hero’s existing plants in Ghaziabad and Manesar.

It’s not just the aftermarket – even manufacturers are looking at launching cars that are compatible with LPG or CNG, hence Hero Motors seems to be entering the alternative fuel kit segment at a very good time.

Hero Electric plans acquisitions, to double capacity at Ludhiana plant

In a bid to expand its electric two-wheeler operations, Hero Electric, a wholly owned subsidiary of the Hero Group, is in considering acquiring two Indian companies that make electric motors and controllers. According to Naveen Munjal, MD, Hero Electric, this move is a part of the company’s expansion strategy, for which the company is ready to spend up to Rs 20 crore.

Hero Electric currently imports controllers, motors and batteries from various manufacturers abroad, but the company wants to take full control of its operations by manufacturing these components in-house. At a later stage, Hero Electric also wants to get into making hybrid two-wheelers, which will be fitted with an electric motor as well as a small petrol-powered engine, allowing the rider to switch between the two at will.

The electric two-wheeler market in India – as elsewhere – is still very much at a nascent stage. But with the introduction of better, more powerful batteries and electric motors, these EVs should be able to start competing with conventional 100cc and 125cc scooters and motorcycles.

Hero Electric, one of the major players in India in the field of EVs, plan on investing Rs 80 crore towards increasing its production capacity at its plant in Ludhiana, to over 125,000 units per annum.

Hero Electric to invest Rs 80 crore on expansion

Electric scooters are a growing segment, and Hero Electric wants a big slice of the action

The Ludhiana-based electric two-wheeler maker, Hero Electric plans to invest Rs 80 crore towards the expansion of its manufacturing facility, and for marketing and brand promotion. The company earlier had a technology partner in Ultra Motors, but has now decided to go it alone.

Hero Electric already has a fairly wide range of electric two-wheelers on sale, and plans to launch up to four new models, the aim being to sell about 70,000 units in FY 2009. The company will also launch bigger, more powerful electric scooters, which might enable them to compete with petrol-powered 100cc scooters.

By next year, Hero Electric hopes to have as many as 160 dealer outlets across the country. The company will be concentrating more on the western and southern regions in the country, where it has identified high-potential areas – especially in smaller towns – for the sales of electric vehicles.

Electric scooters have an extremely low running cost of about 10 paise per kilometer, and EVs are completely non-polluting, so Hero Electric sees much potential for growth in this segment in the years to come. About 1.2 lakh electric scooters were sold in FY 2008, and with the Indian government recently cutting excise duty on EVs, demand is likely to be on an upswing.

Apart from the expanding operations in the Indian market, Hero Electric will also look at exporting its scooters to various parts of South America and the Middle East.

Hero Group and Daimler AG announce JV

The Hero Group and Daimler AG have signed a joint venture for the manufacture of commercial vehicles. The venture will be called Daimler Hero Motor Corporation Ltd. Formal approval for the new company was issued by the Indian government in March 2008, and the two partners now plan to proceed rapidly with the implementation of the joint venture.

Daimler Hero Motor Corporation will initially produce light, medium, and heavy-duty commercial vehicles for the Indian volume market under a new brand name. The search is currently under way for a suitable production location. Negotiations are being conducted with three Indian states, and talks are expected to conclude shortly.

Once a decision is made, construction will begin on a plant that will start manufacturing commercial vehicles by the year 2010. The new company is aiming to achieve a localization rate of up to 80% in order to optimally utilize cost advantages. Production of commercial vehicles for export to other emerging markets will also be launched thereafter.

Daimler and the Hero Group will invest about Rs 4,400 crore (euros 700 million) in the Indo-German joint venture over the next five years, whereby Daimler will contribute euros 220 million (about Rs 1,386 crore) in the form of foreign direct investment.

Marc Llistosella, who directed the joint venture project from the Daimler side, will become CEO of the Daimler Hero Motor Corporation. Amit Chaturvedi, currently President, Strategy and Business Development at Hero Corporate Service Ltd. and project leader from the Hero Group, will serve as Co-CEO. Sunil Kant Munjal will be the chairman of the new company, which will be managed jointly by the two partners.

‘Today is a very significant day for Daimler Trucks and our Asia strategy,’ said Andreas Renschler, member of the Daimler AG Board of Management and head of Daimler Trucks. ‘In the Hero Group we've found an ideal partner, as the two companies perfectly complement one another in terms of the experience and expertise they contribute to the joint venture. The fact that the negotiations and the approval process ran so smoothly makes me very confident that the establishment of the new company will proceed just as rapidly,’ said Renschler.

Speaking on the occasion, Sunil Kant Munjal, Chairman, Hero Corporate Service Ltd. said, ‘We are very happy to partner with Daimler AG on this new joint venture for commercial vehicles. Daimler is the world's leading truck manufacturer with some very successful brands in its portfolio. As a Group, we already have experience in the Indian automobile sector, with a successfully running partnership with Honda of Japan. The Group’s experience of lean manufacturing, supply chain management, current asset management and its strong relationships in the market and the community would help in the new business as well.’