Olectra Greentech Ltd (OGL), a leading manufacturer of electric buses, seeks to stay as a dominant player in the Indian electric bus market, as the company is confident of garnering one-fourth of the share in total e-bus deliveries over the next two years.
It is gathered that 40,000-50,000 electric buses are likely to be delivered over the next two years, and Olectra seeks to deliver one-fourth of these e-buses, the management indicated during the company’s Q1FY24 earnings call.
“As far as we are concerned, we have a strong product line-up, and we completed more than 12 crore kilometers on Indian roads with the delivery of more than 1,250 buses. Also, our technology is proven with which we are able to basically gain the customer confidence and meet the customer requirements,” Sharat Chandra, Chief Financial Officer, OGL, told investors.
With the recent e-bus order (described as one of the largest e-bus orders), bagged by the Consortium of Olectra Green Tech Ltd and its associate firm Evey Trans Private Ltd from Maharashtra State Road Transport Corporation (MSRTC) to supply, operate, and maintenance of 5,150 electric buses (on gross cost contract basis), the total order book of OGL has swelled to 8344 units after delivering 75 e-buses in Q1 of this fiscal.
The company’s total order size is expected to surpass 10,000 soon, as it is likely to get more e-bus orders from a couple of transport corporations.
Meanwhile, the company has received the battery compliance certification for all the models now. Following some fire incidents involving electric two-wheelers, the Indian government introduced new safety norms, batteries in particular. So, Olectra had to take up some tests. It completed all tests and got the certifications for all its models. Due to these new tests, e-bus deliveries were deferred. The company is now confident of making up for the time lost and accelerating deliveries.
Updating on fund-raising plans, Chandra said the market was still not conducive as not many QIP deals happened this year. However, it continues to explore the possibilities.
It is also looking for a good profile for institutional investors who will remain invested in the company. Nomura, Jupiter, Black Rock, and Goldman Sachs have invested in the company already and it is looking for such financial investors to raise funds.
The company is hopeful of executing all its orders in the next two years as it is setting up a new greenfield plant with a capacity of 5,000 units/year and scalable up to 10,000 units/year.
Answering on the recent development around the rejection of BYD’s EV proposal by the Indian government, Chandra said: “BYD is definitely looking forward to extending the relationship beyond 2025. as we have a very, very strong relationship with BYD.”
Also, Olectra Greentech has been working internally to create new product portfolios. With a very strong internal R&D team, comprising more than 50 people, we have been developing and acquiring the knowledge transfer from BYD, he added.
Currently, OGL is sourcing battery cells and some critical components related to power trains from BYD. Also, it has localised the majority of the components required for the manufacturing of e-buses. With PLI scheme support, batteries will be manufactured in India over the next 2-3 years and OGL will be open source the same from India.
Supported by various government measures, e-bus penetration in India has picked up over the past two years, albeit the overall industry volumes for buses declined during the pandemic period.
As of October 11, 2022, 6,740 e-buses were sanctioned under the FAME II scheme, and more than 4200 e-buses are yet to be deployed. The scheme has been extended till March 2024.
E-bus penetration in the market was estimated at 7 per cent in FY23, and it is expected to grow to 11-13 per cent in FY25 and 40 per cent in FY30, according to rating agency ICRA.