Small is indeed beautiful when it comes to electric bus manufacturers. As their bigger rivals are choosing to opt out of many tenders floated by state transport corporations, smaller homegrown companies are rushing in to fill the void.
Over the last few days, Olectra Greentech, JBM Auto and Eka Mobility have collectively bagged orders to deliver 10,350 electric buses worth nearly Rs 20,000 crore from state transport undertakings (STUs). A ruling by the Supreme Court in May saw Olectra being awarded an additional contract to supply 2,100 electric buses. That takes the total order value of these three companies to a whopping Rs 25,000 crore.
Of these three companies, the two listed ones — Olectra and JBM Auto — have a combined revenue of less than Rs 5,000 crore. Their profits are also minuscule at Rs 70 crore and Rs 121 crore, respectively.
No wonder, the stock prices of these companies have been on a roll for the last few months. JBM Auto’s market capitalisation stands at Rs 16,635 crore while Olectra’s is at Rs 10,747 crore. Both companies hit 52-week highs last week.
What has perhaps helped is that large firms like Tata Motors and Ashok Leyland have preferred to stay away from these large contracts from STUs. With a total order book of 2,600 e-buses, Tata Motors is one of the significant players in the segment. But it has repeatedly chosen to sit out of such tenders due to absence of payment security. The industry has voiced the need for a payment security mechanism considering the weak financial health of the majority of India’s STUs.
Asim Mukhopadhyay, CEO and MD, TML Smart City Mobility Solutions, said, “Tata Motors is participating in the tenders after a thorough assessment of the terms and conditions, penal clauses, and project financing risks in the absence of necessary payment security mechanism.
We are working closely with the government and the authorities to set up the required mechanism, and will participate aggressively in the relevant tenders once it is in place.” TML Smart City Mobility Solutions is a 100% subsidiary of Tata Motors who owns and runs the e-buses on contract basis.
Earlier this month, Olectra received a letter of intent from Maharashtra State Road Transport Corporation to supply, operate and maintain 5,150 electric buses and allied electrical and civil infrastructure on gross cost contract (GCC) basis. The order is valued at Rs 10,000 crore.
Last week, Faridabad-based JBM Auto won orders for about 5,000 electric buses from STUs of Gujarat, Haryana, Telangana, Delhi and Orissa among others. These orders also included supply to companies for employee transport.
While Olectra’s latest order from MSRTC is also on GCC basis, the buses will be sold to its sister concern Evey Trans, India’s largest e-bus operator, promoted by Hyderabad-based Megha Engineering and Infrastructures. Olectra has a technology tie-up with China’s BYD.
Nishant Arya, MD & VC, JBM Auto, said, “Our orders are a combination of GCC and independent orders from various STUs and private companies. The payment mechanism is being taken care of by way of various measures such as escrow clauses, etc.”
Tata Motors ended FY23 at the fifth spot in terms of vehicle registrations as per data supplied by the Centre-controlled Vahan. The ranking was led by PMI Electro Mobility Solutions followed by Olectra Greentech.
A mail sent to Switch Mobility, the e-bus making subsidiary of Ashok Leyland, remained unanswered at the time of going to print. The newly formed Hinduja group company had previously claimed to have confirmed orders for 2,500 electric buses including the order under the tender floated by state-run Convergence Energy Services earlier this year.
Pune-based Eka Mobility recently bagged orders for supply of 57 e-buses from the Mira-Bhayandar Municipal Corporation. Sudhir Mehta, chairman, Eka Mobility, said, “Out of the 500 orders that we won, 200 were in the last few months itself. Government is working on addressing the payment security mechanism. We have had several positive discussions with the government on this.”