Keen to get external investment for EV arm Switch: Ashok Leyland MD

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Hinduja Group flagship firm Ashok Leyland is keen to get external investments for its electric vehicle arm Switch Mobility but only from ‘the right strategic partner’, and it will not shy away from investing on its own till such an ally is found, according to its Managing Director and CEO Shenu Agarwal.


While Switch India is likely to be cash neutral or cash positive going forward, on an operating level at least, for Switch UK some more investments may be required in FY25, with the European and UK markets still not going that strong, he told analysts.


“We are very keen on getting external investments also, but we want to make sure that we have the right strategic partner with us. I mean, we do it at the right valuation. So right now, the focus is to get Switch into a very, very strong mode by developing products, by maturing our technology on both the bus side and the LCV side,” Agarwal said.


He was responding to a query on whether the current tough funding environment could delay roping in an external partner for Switch Mobility, which houses the electric vehicles (EV) business of Ashok Leyland.


“So, whenever we get a good offer from an external investor, we’ll certainly look at that,” Agarwal said, adding that the Ashok Leyland board has approved an equity investment of Rs 1,200 crore in Optare, which is the holding company for Switch UK and Switch India.


“We shall be inducting this equity in one or more tranches over the next three to six months,” he added.


Till the time a right partner is found, Agarwal said, “Until then, we won’t shy from investing on our own from the Ashok Leyland side. The balance sheet of Ashok Leyland is pretty strong right now. We have no concerns as to whether or not we can fund this growth in Switch for the future”.


On the possible funding requirements for the India and UK operations of Switch Mobility, he said, “We think that Switch India going forward on an operating level at least, would be cash neutral or cash positive. If there is any other investment required in Switch India, that would be more or less some smaller amounts that would be required for product development, etc”.

On Switch UK, he said, “The European markets are still not going that strong or the UK market is still not going that strong. some more investments may be required in FY25. It would be hard to quantify that at this moment in time, but we think that Switch India is more or less self-sufficient if any investment has to be made, that would be for some kind of product development or capex, but Switch UK might need some more help going into next year.”

Agarwal said Switch products are performing “extremely well in the market” and the company has an order book of more than 1,100 buses and letters of intent (LOIs) for electric light commercial vehicles (LCVs) for more than 10,000 units and the first batch of electric LCVs would be delivered in Q4 of this fiscal.


While the company is encouraged by LoIs, he said, there are a lot of other ecosystem challenges in terms of adoption, and Ashok Leyland is trying to partner with other players, including the governments, in creating the right ecosystem to drive the adoption of EVs.


He also said the development work on “E1 bus designed for the European market is also progressing well”.


When asked for the growth outlook, Agarwal said that for the next year, it will be too soon, but as for the current year, the company is sticking to its guidance for medium and heavy commercial vehicles (MHCV) between “8 per cent to 10 per cent at the industry level”.


“On the LCV, at the beginning of the year, we gave an estimate of 4 per cent to 5 per cent on the industry. So far, our industry has grown by 2.5 per cent, which is slightly lower than what we had predicted at the beginning of the year, but we think there also, we are seeing some green shoots in terms of e-commerce demand and in terms of overall uptick, etc. So, we are very hopeful that even for LCV, we will see better growth trends in H2 as compared to H1.

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