Leyland to invest up to ₹1,200 cr in Switch Mobility
2 min read 24 May 2023, 12:10 AM ISTSwitch Mobility has decided against setting up a new factory after evaluating the plan last year.
PremiumNEW DELHI : Ashok Leyland Ltd, India’s second-largest commercial vehicle maker, plans to invest as much as ₹1,200 crore in Switch Mobility during this fiscal year to fund the electric vehicle unit’s capital requirements as external fundraising efforts face delays, said Dheeraj Hinduja, chairman of Ashok Leyland.
Switch Mobility has decided against setting up a new factory after evaluating the plan last year. Instead, the company will use Ashok Leyland’s facility to build its products, allocating a portion of the investment from the parent towards acquiring equipment for the factory.
The funds will also be utilized to develop new electric light commercial vehicles and double-decker buses. Switch Mobility, however, remains eager to attract external investors with a “long-term mindset", and discussions to that effect are going on, Hinduja said.
“The global market has changed a lot in how it views electric vehicle companies. Ashok Leyland will continue to invest in the growth of Switch. We have strong financials, and the requirements for Switch are easily met by us," Hinduja said.
Switch Mobility has 2,500 orders, primarily for electric buses from India and close to 100 from the UK.
“Our discussions (with investors) are ongoing, but for the moment, from where Ashok Leyland is today, we will continue to invest directly into Switch, and in parallel, our discussions will continue. If we find like-minded partners, we will, of course, more than welcome them. But at this stage, we have multiple conversations going on, but immediately, as I see it, and to complete the capex Switch has for its new products, Ashok Leyland will be investing directly," he added.
“We are the only ones at the moment with double-decker electric vehicles. We have vehicles now operating in Ahmedabad, Patna, Bihar, and Bangalore and new orders for Hyderabad and Delhi. This year will be significant from a Switch perspective as we will have five new products," Hinduja said in an interview.
Electric bus makers are also opting out of the National Electric Bus Programme in the absence of a payment security mechanism, and Ashok Leyland’s Switch Mobility will not participate in any government tenders until it gets appropriate rates and assured payment, Hinduja said.
“The Indian government has been very proactive in supporting the adoption of electric vehicles. It’s very critical for all cities to move towards these green vehicles. One thing that is very important for all of us is to ensure that when we get into these 10-12 year bus contracts, those contracts are secure, and payments would be secured as well. And I know over the last few months, there have been some discussions on this, but as far as Ashok Leyland is concerned, whilst we are very keen to participate, we will only participate in tenders where we are very comfortable that the rates are appropriate and our payment is secured as well. If we do see in any of these tenders that either of these two is not being met, then I think we will just not participate in those," he said.
Ashok Leyland expects a 10% growth in commercial vehicle sales in India in the current fiscal year, surpassing pre-covid peak levels.
As commercial vehicle manufacturers prioritize profitability over discounts amid a consistent demand environment, Hinduja expects improved realizations for CV makers this year.
On Tuesday, the company reported a profit of ₹751.4 crore for the March quarter, declining by 16.6% from ₹901.4 crore in the year earlier. However, the truck maker more than doubled its operating profit.
