Subhash Chandra-led Essel Infraprojects Ltd has halted plans to build electric vehicles, and is looking to first reduce its debt of ₹11,466 crore, said three people directly aware of the development, requesting anonymity.
Last year, Essel Infra had announced investments of ₹3,500 crore to develop electric vehicles, including electric buses and three-wheelers, besides setting up related infrastructure such as charging stations in Uttar Pradesh. Mint reported on 30 November that the firm plans to set up a lithium-ion battery manufacturing plant in Andhra Pradesh.
According to the people mentioned above, since the company’s debt-reduction plans are still in the works, some employees associated with the proposed electric vehicle venture have been asked to leave.
To fund its entry into electric vehicle space and also trim its debt, the company has been trying to raise funds by divesting stakes in its road infrastructure, renewable energy and power transmission businesses.
Essel Infra has initiated talks with potential buyers to sell much of this portfolio. However, a sale is yet to be concluded.
Last month, JSW Energy Ltd had also scrapped its plans to build electric vehicles due to market uncertainties. In February 2018, Essel Infra had signed an agreement with the Uttar Pradesh government to roll out 1,000 electric buses, besides setting up battery charging and swapping stations across the state.
The company carried out detailed studies on every aspect of the business related to electric mobility, such as battery charging and swapping, tie-up for electric buses and battery manufacturing, but as of now, these plans have been put on hold, the first person said. “The company, though, has not scrapped the plan as yet, but as of now, there is no action unless they reduce debt. This makes sense since setting up an infrastructure for electric vehicles will be cost-intensive, and the company needs to be cautious," he added.
An Essel Infra spokesman said the company remains committed towards the electric vehicle division. “However, it is too premature to comment on the electric vehicle business as the company is evaluating the technology and processes through detailed trials at Mohali, and would launch as and when we are convinced with the analytics and relevant data points."
“At the same time, we would like to refrain ourselves from commenting on any market speculation-driven stories on industry and our businesses," he added.
The second person cited above said, besides the debt resolution obligations, most large corporates in India are looking at the commercial viability of the electric vehicle business, as there are no volumes at present.
“Hence, some of them are taking a step back to evaluate before investing," he added.
Essel Green Mobility, the new electric vehicle business vertical under Essel Infra, was piloting a commercial e-rickshaw rentals business in Mohali, allowing drivers to rent e-rickshaws and their batteries on monthly packages.
As part of the pilot, it set up a charging station in Mohali and provided 100 e-rickshaws. It was also looking to offer its services to Chandigarh and Panchkula with 500 more vehicles.
While Essel Infra had plans to venture into every aspect of electric mobility, most automobile manufacturers are yet to invest significantly in developing an ecosystem.
Essel had also considered tying up with foreign firms for technology. Once the debt on its balance sheet is reduced, it may revive its plans in the electric mobility space.