M&M lines up Rs 600-800 crore for EV development

Auto major Mahindra & Mahindra (M&M) which is betting big time on electric vehicles (EVs) will be investing around Rs 600-800 crore in next few years to increase the capacity of its battery assembly plant. The company has already spent around Rs 600 crore in the sector since the time it first acquired Bengaluru-based Reva Electric car company in 2010.

This investment will be different from the product development which the company is doing with its Italy-based partner Pininfarina and Korea-based SsangYong Motors, both the foreign companies in which it has invested in earlier years.

M&M managing director Pawan Goenka, during the announcement of the company's financial result for quarter ending March 31 which was held on Tuesday, said, the Board in a meeting held on Tuesday has asked the management not to have a conservative approach towards EVs.

M&M's push for EVs comes on the backdrop of government's push on the segment in a big way as it expects around 5 million of it to be sold by around next 15 years. As per a report released by Centre's think tank Niti Aayog earlier this month, the accelerated adoption of electric and shared vehicles could save about $ 60 billion in diesel and petrol costs while cutting down as much as 1 gigatonne (gt) of carbon emissions for India by 2030. This would result in an annual diesel and petrol reduction of 156 million tonne of oil equivalent making a net-fuel cost saving of approximately Rs 3.9 lakh crore.

Mahindra Electric, the electric-vehicle manufacturing arm of Mahindra Group, has assembled around 400-500 battery at its Bengaluru plant. The company wants to increase it to 1,000 units per month within the next six months further escalating it to 5,000 units per month within the next two-three years, for which the company is investing in its Pune plant, Goenka had earlier said.

The company on Tuesday reported 19.93% increase in its standalone profit-after-tax (PAT) at Rs 725.16 crore for the fourth quarter ended March 2017. The company had posted a PAT of Rs 604.63 crore during the same period a year ago.

Its total income from operations during the fourth quarter rose to Rs 12,319.64 crore, up 4.04% from Rs 11,840.47 crore a year earlier, M&M said in a regulatory filing. The company's vehicle sales remained flat at 1,30,778 units during the fourth quarter. It sold 46,583 tractor units during the period under review, up 13.3% from the same period a year ago.

The company in its filing also pointed an impact of Rs 171 crore loss on implementation of BS-IV vehicle, which has to be incurred on account of giving last-minute discounts, conversion to BS-IV vehicle and exports of BS-III vehicle. The company was left with over 13,000 units of BS-III vehicle after the Supreme Court decision to ban the BS-III vehicle sale from April 1 this year.

REVVING UP

• The company has spent Rs 600 crore in the segment since it acquired Reva electric car company in 2010
   
• The government expects 5 million EVs to be sold by next 15 years