In a set-back for India’s expanding electric vehicle (EV) industry. Hero Electric, a prominent producer of electric scooters, has gone into insolvency under the Insolvency and Bankruptcy Code (IBC). After defaulting on a Rs 1.85 crore payment to Metro Tyres. That has exposed deeper financial vulnerabilities at the company. Admitted claims against Hero Electric total more than Rs 301 crore, emphasizing the complexity of its financials.
Hero Electric Regulatory Problems and Financial Vulnerabilities
Hero Electric’s journey towards bankruptcy is indelibly connected to regulatory problems and subsidy controversies. Under the Faster Adoption and Manufacturing of Electric Vehicles (FAME II) scheme. Hero Electric, together with Okinawa Autotech, has faced fierce government criticism for alleged misuse of subsidies. This has led to the issuance of demands for refund of Rs 469 crore, an amount that Hero Electric has contested in courts. The company’s sales have plummeted sharply, from around 100,000 units in FY23 to just 11,500 units in the FY24. The reason is largely regulatory hurdles and supply chain problems caused by the pandemic.
Hero Electric Insolvency Proceedings and Future Prospects
The insolvency resolution process is underway, with the Resolution Professional (RP) inviting expressions of interest from potential investors. The deadline to submit these expressions is March 14, 2025. The final roster of eligible bidders will be released on April 8. The filing date for resolution plans is May 13, 2025. Big lenders including Bank of Baroda, Kotak Mahindra Bank, South Indian Bank, and IDFC First Bank hold high voting shares in the Committee of Creditors (CoC). Bank of Baroda holds the greatest proportion with 66.92% voting shares, and therefore it is the strongest player in the decision-making process.
Industry Outlook and Reactions
Despite the current troubles at Hero Electric, the Indian electric two-wheeler market will see massive expansion. Electric cars are projected to account for one in five new two-wheeler purchases in 2030. Driven by increasing customer demand for environment-friendly scooters. Other players in the EV space such as Ather Energy are ramping up operations, highlighting the industry’s growth prospects.
ELCTRIK Speaks
Hero Electric’s insolvency proceedings mark a turning point in India’s electric vehicle market. With both challenge and opportunity encapsulated in this rapidly evolving market. Amidst the ongoing struggle with regulatory fussiness and financial pressure, the implications of these proceedings will be watched by investors and industry players alike.
