New Delhi: Ashok Leyland will seek shareholders’ permission to finance, or to stand guarantee for, INR 4,000 crore to 5,000 crore to Switch Mobility Automotive, a step-down electric bus manufacturing subsidiary.
ETAuto had reported earlier about Ashok Leyland weighing the option of pumping funds into Switch Mobility. The loan will be funded by internal accruals at the Hinduja Group’s main company. At the end of March 2023, the company’s cash and bank holdings were INR 501 crore.
Gopal Mahadevan, Ashok Leyland’s full-time director and chief financial officer, said that the resolution here is only an enabling one and that the amounts indicated of INR4,000-5,000 crore are not the absolute equity infusion but a broad indicative range of the aggregate of transactions with Switch.
Ashok Leyland has not been able to attract investors to Switch Mobility, in which it owns 90%, following a USD 18 million investment by the UK-based Dana Incorporated in July 2021. Dheeraj Hinduja, executive chairman of Ashok Leyland, said that the electric vehicle business headquartered in Switch is critical for Ashok Leyland’s future-proofing. The aforementioned investment will most likely take place in FY24.
According to senior executives, Switch would have a very high expenditure year in FY24. Funding will be required for new goods such as electric Dost and Bada Dost versions, a low floor 12-meter bus and a low floor 9-meter bus for the domestic market, and a low floor 12-meter E1 bus for Europe.
Switch Mobility claims to have received orders for 2,500 electric buses. According to media sources, the company won the majority of the tender released by the state-run Convergence Energy Services (CESL) in January, ranking as the lowest bidder to supply 2,600 electric buses.
