Hero MotoCorp suspends payments to suppliers amid lockdown

NEW DELHI: The country’s largest two-wheeler manufacturer Hero MotoCorp said that is invoking ‘force majeure’ to suspend full payments to all suppliers till the fund position becomes normal.

The decision comes shortly after the Supreme Court Friday refused to grant an extension for sale of BSIV-compliant vehicles despite the lockdown. The Apex Court has allowed only 10% of BSIV stocks to be sold in 10 days after the lockdown gets over, except in the Delhi-NCR. Hero MotoCorp has the largest inventory of BSIV-compliant two-wheelers of the total stocks of 700,000 units scooters and motorcycles in the country.

In a communication to its suppliers, Hero MotoCorp held in the current situation the company has no visibility of receivables, have stock of BSIV and BSVI vehicles in the field and dealerships pan India are now shut for 21 days. “In this situation, we are left with no other option but to invoke Force Majeure & regret to inform that HMCL will not be in a position to meet all its obligations”, the company said. A copy of the communication has been reviewed by ET.

Hero MotoCorp has communicated to its supply chain partners bill discounting facility is withdrawn effective immediately. The company will release payment to MSME and suppliers having outstanding upto Rs. 2.5 crores as on 23rd March’2020 and will be paid in full as per standard payment terms.

Hero MotoCorp said it has made payment on 22nd March as per the regular cycle but will not be able to keep up the track record of timely payment effective today. The company added in its communication, “We are monitoring the situation closely & would like to confirm that despite these difficult times, Hero MotoCorp will release 25% of the due amount on all the future payment dates & balance amount will remain pending until fund position return to normal.”

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Hero MotoCorp said it is exploring several avenues to improve the situation. “We are reviewing our ability to pay on a daily basis & may amend the payment favorably for the supply chain partners in future

We completely understand the pain and will do everything possible to come out of this crisis mode. We request your understanding & solicit your support in this unprecedented situation”, Hero MotoCorp said.


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