The Hindu Business Line : ‘Hero Electric may buy battery packs from any vendor’

Chennai, May 14 Hero Electric, a subsidiary of Hero Exports, may buy the electricals (motor, controller, charger and battery) from any vendor, the Managing Director, Mr Naveen Munjal, told Business Line on Tuesday.

This stance is at sharp variance with that of Ultra Motor’s, which says that Hero Electric could buy the components only from Ultra, for the next six months.

The Ultra Motor Company, is venture-funded, London-headquartered company that intends to set up dealerships and sell electric scooters in India.

Commercial pact

Hero and Ultra entered into a commercial agreement in September 2006, under which the two companies were to jointly set up dealerships.

A year later, they entered into negotiations for taking the relationship forward, including setting up a joint venture for product development.

As negotiations fell through, the two companies decided to disengage.

Now there are a couple of contentious issues.

First, Ultra Motor believes that according to the commercial agreement, Hero can buy the battery packs only from Ultra for 180 days from the date of termination of the agreement, April 24.

Hero Electric disputes this. Mr Munjal said that Hero could buy from any vendor.

Dealership issue

Under the commercial agreement, the two companies also jointly set up 50 dealerships. This was done.

According to Mr Deba Ghosal, Marketing-Director, Ultra Motor, the company has set up 120 more, which Mr Munjal says is a violation of the agreement.

The agreement allows Ultra to set up ‘stores’ and not dealerships — there are technical differences between the two.

Mr Munjal said that Hero Electric has taken the issue to an arbitrator.

In an email to Business Line, Ultra Motors has said that it intends to launch several models of electric scooters in India in the current year, both in high and low speed segments.

It targets sales of 60,000 units and a fourth of the market size, and revenues of $38 million (Rs 150 crore).

Ultra’s existing product is Velocity, which it gets manufactured at the Hyderabad plant of Hindustan Batteries Ltd.

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