Ashok Leyland targets Ebitda break-even for Switch Mobility in FY25

Switch Mobility has order book of over 2,000 vehicles, including an order for 500 electric buses from MTC Chennai

Commercial vehicle major Ashok Leyland expects the Indian business of its electric vehicle (EV) arm Switch Mobility (Switch) to reach break-even on an operating basis during the current financial year. The company said it was unlikely to bring in investors for Switch or its e-Mobility as a Service (eMaaS) arm, Ohm Global Mobility, unless it finds suitable investors and good valuations.

 

Ashok Leyland's Executive Chairman, Dheeraj Hinduja, told Business Standard that the parent company's financial position was "very comfortable" and it will continue to support Switch and Ohm. As of now, Switch Mobility's order book includes over 2,000 vehicles, including an order for 500 electric buses from the Chennai Metropolitan Transport Corporation.

 

"We will continue to fund Switch; when we see the right time or if we find good investors, we will be open to that. At this point, we are continuing to grow ourselves. When you see good products coming and the profitability of the company increasing, automatically the valuation created for Ashok Leyland and its shareholders will also be substantially more," Hinduja said.

 

Earlier, he said that Switch India is expected to achieve Ebitda (earnings before interest, taxes, depreciation, and amortisation) break-even during the current financial year. With this, the company will be able to meet its operating expenses using the revenue generated from operations.

 

"Switch is moving in the right direction. This Ebitda target we mentioned is for Switch India because our volumes are doing very well there. We have launched the LCV and have received orders for 500 LCVs. The demand for buses is growing. We are number one in diesel buses, and we will continue that leadership position on the electric bus side as well," Hinduja said.

 

"We initially progressed slowly as rates were not attractive. Now, rates have risen as the competition has also adjusted the rates they are bidding at. We are performing well in our product offering, service, and range. In all aspects, our service performance is very good," he said.

 

Ashok Leyland recorded an 11.6 per cent rise in Ebitda for the July-September quarter (Q2FY25) at Rs 1,017 crore, compared to 11.2 per cent (Rs 1,080 crore) in the corresponding quarter of the previous financial year. Through various measures, the company has managed to increase its margins from 8 per cent two years ago to 13 per cent last year.

 

"One of these measures is cost-reduction, which we have been continuously applying. In the last two years, we have witnessed a sizable reduction due to lower metal costs. Each year, we have saved more than Rs 650 crore, which translated to a 1.5 per cent margin improvement," said K M  Balaji, Chief Financial Officer, Ashok Leyland.

 

"This year, we have also set a similar target to reduce costs. This includes various sub-levers like value engineering, e-sourcing, commercial reductions, turnover discounts, and clear-down analysis of competition items where we can benchmark our components against the competition," Balaji said, adding that this is being done without compromising on quality and safety.