Delay in fund raising helped improve Switch valuation: Dheeraj Hinduja

Ashok Leyland, the flagship company of the Hinduja Group and commercial vehicle major, is all set to come out with the electric versions of light commercial vehicles Bada Dost and Dost this year

Ashok Leyland, the flagship company of the Hinduja Group and commercial vehicle major, is all set to come out with the electric versions of light commercial vehicles (LCVs) Bada Dost and Dost this year, and is already in talks with e-commerce and logistics players in this regard. The company’s Executive Chairman Dheeraj Hinduja talks to Shine Jacob about its EV plans, how delay in fund raising helped Switch Mobility and the dip in demand in international business. Edited Excerpts:

What is the status of the launch of the electric versions of LCVs Bada Dost and Dost?

You will see the launch of both Bada Dost and Dost within this calendar year. We have actually progressed substantially and are doing a lot of testing on all of these vehicles in different terrains and climate conditions, and also checking how the batteries are operating. We are very confident as the products are performing very well on track.

We have to be very careful and meticulous in all our testing and safety.  If we come up with any issues, even if it means delaying the product, we will delay it, but we will not compromise on the safety factors. Based on all the developments, you will see the products in 2023.

Ashok Leyland’s EV arm Switch Mobility had plans to raise $200-250 million. What is the status and why is it getting delayed?

One of the benefits of the delay in fundraising is that we have been able to optimise the plans even further and we have been able to identify how within the existing infrastructure of Ashok Leyland, we can sub-contract some of the production work. We are looking at how we can introduce EVs at the lowest cost possible, because that is what the Indian market requires.

As far as the fund raising is concerned, there has been a delay and in a sense the delay has been positive for us. It has improved our valuation. We have many more products on the road. We recently won the Convergence Energy Services Ltd (CESL) tender (2100 buses) and another order for double-deckers. Our order book is very robust. When we interact with e-commerce and logistics customers, they are also eagerly looking for the light vehicles. It has been a very strong last few months for Switch.

We want to ensure from the AL shareholder perspective that we get the right valuation and we want people to be invested in a long-term basis for the growth and development of Switch. We will get the right share of investors for Switch and the interest levels are very high.

You mentioned talks with e-commerce and logistics players on EVs. Can you elaborate a bit on this?

I wouldn’t name any one player, but large e-commerce players and logistic players in India are in talks. Some of them are already customers of Ashok Leyland. We are in discussions with them and we are testing our products as well. We are also getting their feedback and also looking into the changes they want. They want to ensure that their last mile delivery is done in an efficient and green manner.

At this point of time, their only option is three wheelers, which might not be sufficient for the type of loads that they carry. That is where a product like Dost and Bada Dost will fill the gap. Bada Dost will be launched first and initially, it will only go into fleets, so that it is easier for them to create the infrastructure for charging. 

On a retail basis, I do not see this transition happening quickly as we do not have charging stations across the country so far. Initial sales will very much be for the fleet. India is a large market for LCVs, over 400,000 to 500,000 vehicles a year and in that context, introduction of a Dost and Bada Dost has large market potential.

Export markets were down by 8 per cent to 2,936 units during the third quarter. What do you make of it?

It only dropped in Q3, and if we see the first 9 months compared to the last year, we are in fact up. If you look at the statistics, international sales of most of the other original equipment manufacturers have declined. We are one of the few that have seen growth in the first 9 months.

Our traditional markets are Sri Lanka, Bangladesh and Nepal. Unfortunately have all been hit due to issues regarding high inflation, interest cost and energy prices.  The Middle East continues to do well, Africa is stable, but SAARC countries are a very large proportion of our international sales and that has literally come to a halt at this point of time. We see this as temporary and the market will bounce back.

The company has recently changed its tagline to Koi Manzil Door Nahin as part of your 75 years. For Ashok Leyland, what is this manzil or destination?

We have spoken about our vision many times. We have to be a global top 10 commercial vehicle player. It is not an easy task, when you take into account the large LCV segment on a global basis. We are all committed to it and I am very confident that we will achieve it.

At present, we need to fulfill the aspirations of our customers, employees, shareholders and from in all respects. This better reflects the next stage of what Ashok Leyland wants to do.