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Ashok Leyland said the Indian business of its EV arm Switch Mobility is likely to achieve a cash break earlier than the company’s UK operations.
Switch Mobility is gearing up for its growth phase as it has launched new products in the electric bus and small commercial vehicle segments and both the product groups carry a good order book. While Switch’s e-bus order in India stands at more than 1,100 units, its recently-launched electric small trucks have secured orders for more than 10,000 units.
Equity infusion
To support Switch’s growth plans including product development and associated things, the board of Ashok Leyland has approved an equity infusion of ₹1,200 crore through its holding company Optare Plc, even as the Hinduja Group continues to look for a strategic investor.
“We think that Switch India will reach cash-neutral or cash-positive on an operating level. Switch India would only require smaller amounts of investments for product development, etc. However, Switch’s UK operations may require some more investments as the European market is not growing that strong. We don’t know the quantum of amount required for UK operations going forward. But Switch India is more or less self-sufficient,” said Shenu Agarwal, MD & CEO, Ashok Leyland.
He explained that while the management is keen on getting a strategic investor at the right valuation, the current focus is to get the Switch Mobility operations into a strong mode by developing new technologies and products in both bus and small truck segments. Till the company gets the right investor, it won’t hesitate to invest from its own funds in Switch as the balance sheet of Ashok Leyland is pretty strong now,” he added.
In July 2021, Switch Mobility secured $18 million from Dana Incorporated, a global leader in drivetrain and e-propulsion systems. Per the agreement, Dana will only be an important supplier to Switch but will also pick up a one per cent stake at a valuation of $1.6 billion. Over the past couple of years, Ashok Leyland has been looking for a strategic investor for Switch, while continuing to support Switch through ICDs from time to time.
Switch Mobility’s business will comprise two major areas — direct sales and e-mobility as a service (E-MaaS) contracts.
OHM India, a subsidiary of Ashok Leyland, will procure e-buses and e-LCVs from Switch for executing E-MaaS contracts. Recently, Ashok Leyland infused ₹300 crore in OHM India as the group sees bright prospects for growth in this business.
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