hero electric: Rating agencies put Hero Electric, Okinawa on watch

Rating agencies have placed electric two-wheeler makers Hero Electric and Okinawa Autotech in wait for negative repercussions after suspending subsidies for the two companies under the government’s electric vehicle (EV) subsidy program.

The Department of Heavy Industry has launched an investigation into alleged violations of localization standards mandated by electric vehicle manufacturers under the Faster Adoption and Manufacturing of Electric and Hybrid Vehicles (FAME) program. While several companies have come under scrutiny, subsidies for Hero Electric and Okinawa show ‘expired’ status on the FAME website. “The exclusion of the Company’s products from FAME eligibility and/or any prolonged delay in receiving grant applications could adversely affect its credit profile,”

said in a recent report about Hero Electric, testing the company’s debt rating with negative implications.

“The FAME subsidy accounts for 25-30% of the company’s total price of (electric two-wheelers), and eliminating it would affect the price competitiveness of its products and/or profitability,” said Care Ratings. The two companies’ subsidies have now been on hold for a few months, although the status was only changed to “expired” in September. A further delay in subsidies would impact Hero Electric’s already stretched liquidity profile, the rating agency said.

made similar observations at Okinawa Autotech and put its negative impact ratings to the test. The development could delay Hero Electric’s fundraising plans and further impact cash flows and the liquidity profile, Care Ratings said.

Hero Electric has been in talks with investors to raise funds for its expansion plans, including the establishment of two more assembly plants.

Hero Electric and Okinawa Autotech have informed the rating agencies that they comply with the rules of the FAME program and have completed all procedural formalities to resume their subsidies.

In response to ET’s emailed inquiries, Jeetender Sharma, Okinawa Autotech’s general manager, said the company has followed all government guidelines. “We have shared all documentation with the inspection bodies to their satisfaction,” he said, adding that the company continues to subsidize its dealers and customers. “At Okinawa, we ensure that the highest quality standards are maintained in all of our products and processes.” ET’s inquiries to Hero Electric went unanswered at the time of writing. The FAME program includes a restriction on manufacturers who source key components for their electric vehicles locally, such as motors and controllers, in order to help create a local ecosystem in India and not subsidize cheap imports from China with taxpayers’ money.

Rating agencies put Hero Electric, Okinawa, under surveillance

https://economictimes.indiatimes.com/markets/stocks/news/rating-agencies-put-hero-electric-okinawa-on-watch/articleshow/95388823.cms hero electric: Rating agencies put Hero Electric, Okinawa on watch

Russell Falcon

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