IOC pact gives us access to 37K retailers, 13K LPG distributors: Maini

This partnership allows us to access IOC's 37,000 retail outlets and 13,000 LPG distributors, and they have a very strong brand presence, he says

Chetan Maini has often been a trendsetter. Much before the Teslas, Athers and Olas of the world, Maini, now chairman of battery swapping major Sun Mobility, co-founded Reva, India’s first electric car company in the 1990s. The world was then busy guzzling diesel and warming the earth. But Reva remained a trial for customers, before Maini sold it to Mahindra, which subsequently gave it a quiet burial. But the Stanford alumnus moved on to start a battery swapping business in 2017, again a bit early for its time. Maini (54) has now roped in state-run refiner Indian Oil, India’s biggest transport fuel retailer, as an equal partner. That involves setting up battery swapping stations (BSS) in IOC's fuel outlets. In an interview, Maini spoke to S Dinakar in Chennai to explain what this new tie up means for both companies, and for battery swapping. Edited excerpts:

 

On the Indian Oil-Sun Mobility tie up

 

They've invested Rs 655 crore in Sun Mobility, the parent, and committed Rs 1,800 crore over three years into the 50:50 BSS joint venture (JV) we have formed. This partnership allows us to access IOC’s 37,000 retail outlets and 13,000 LPG distributors, and they have a very strong brand presence. The JV will focus on micro mobility, which is two-wheelers, three-wheelers and small four-wheeler delivery vehicles like Tata ACE (under 2 tonnes). These vehicles are almost 80 per cent of all vehicles sold in India.

 

What kind of valuation did you have when IOC invested? How much money have you raised till now?

 

We don't publicly disclose the valuation on that front but over different rounds, we’ve raised over $170 million in the last seven years. We have IOC with $78.3 million, Vitol invested $50 million, and in 2021, Bosch bought a stake.

 

You have about 650 BSS in 20 cities. With this JV you have plans to increase that to 10,000. Will your existing assets be transferred to the JV?

 

All our assets are being transferred to the joint venture. So, all the batteries we have, all the stations we have and all our customer contracts, are being transferred to the joint venture.

 

How much will be invested into these 10,000 stations? How much does a battery swapping station cost? 

 

I would say, somewhere around Rs 8-10 lakh (BSS cost). The station set up depends upon its location. There's sort of a canopy cost and then an infrastructure cost. So, in some cases, if there's electricity connection available then your infrastructure cost is little. But if the electricity connection needs a transformer, the cost of your installation is higher.

 

What kind of investments is the JV looking at in BSS, going forward?

 

By 2030, we will be looking at over 50,000 stations and such a deployment would need an investment of Rs 20,000 crore. 

 

How did you tie up with IOC?

 

We started this partnership four years ago. We put around 20 stations for them to understand how it works. They were very happy — and in phase 2 — we set up another 80 stations. From the IOC side, they believe this was the right space to be in. We got this investment in June. It's taken us four months to transfer people and everything. We put in some more stations already in the last month or so, but they'll all really start from January.

 

Do you have any annual targets for the IOC venture? Second, will they be set up in the premises of IOC’s fuel outlets?

 

Next year, we're adding a little over 2,000 stations, maybe 2,500. And then, the following year we keep on adding to 10,000 stations by the end of three years. We plan to expand to 50 cities from the 20-odd cities that we are in now. Approximately, 25 to 30 per cent of our stations are IOC's petrol pumps today. 

 

What is your main revenue stream?

 

The main thing is from battery swapping. We are going to be selling the batteries and swapping stations to the joint venture. Other businesses are still in the early stages. The heavy vehicle business is through the development level.

 

Will your manufacturing units also go to the joint venture?No, manufacturing stays at Sun Mobility. Sun is a technology and a manufacturing entity.

 

What is your share in the BSS market?

 

Each BSS would have 14 batteries of 2.1-kilowatt hour capacity, at least. And these stations can do over 200 swaps per day. But a competitor’s stations with 14 slots would do something between 70 and 90 a day, because it takes longer to charge. Our batteries have special thermal management, stations are cooled, and we use high charging capability. Our 650 stations are like 2,000 stations for someone else. 

 

What are your current investments in the business?

 

Total investments we have is $170 million. We've also brought in debt. Investment has been upwards of $200 million.

 

So, if you have 3,000 stations next year, you'll need around 42,000 batteries, right?

 

About 42,000 batteries in the stations and you'll have approximately 8 batteries in the field for every battery in the station.

 

Do you need to expand your battery making capacities for the IOC venture?

 

By March, we are going to further increase our battery capacity. We have a little over 200,000 units capacity and we're going to increase that to 300,000 plus. And that's sort of what we need for next year.

 

Are you expanding into any other countries abroad?

 

There's a lot of interest in Africa and Southeast Asia. We have pilots running in these countries for several months.