Olectra Greentech hit by EV safety norm delays, Q4 sales impacted

Olectra Greentech Ltd. saw its Q4FY24 sales impacted by delays in obtaining testing and compliance certification for the new electric vehicle (EV) battery safety norms announced in late 2022. The company, citing a lack of adequate testing facilities in India, opted for online testing conducted in China. However, this approach proved unsuccessful in securing timely certification.

The new regulations, mandated by the Ministry of Heavy Industries, require stringent checks at multiple levels—cell, battery management system (BMS), and the entire battery pack—to enhance passenger safety concerns following a spate of EV fire incidents in India a couple of years ago. While the deadline for obtaining certification was initially set for April 1, 2023, it was eventually extended to October 1st due to industry-wide challenges in meeting the requirements.

The company's CFO B Sharat Chandra said during the recent post-result analyst call, "I would like to elaborate that the Government of India has introduced the safety norms for the battery where the testing and compliance certification are required to be done. As the facilities were not available in India, the testing has to be done online in China. It took more time, and it was beyond our control and capacity."

"We successfully completed all the trials and obtained the requisite certificates, but in the interim, we lost about two quarters and post-certifications. There were constraints in ramping up production by the manufacturers and vendors. So that is the reason the quarter four and the full year got impacted, and that is one reason," he added.

Olectra Greeentech sold around  541 e-buses in FY24, compared to 580 units registered in FY23. During Q4FY24, the company sold about 131 units. The company manufactures 7 metre, 9 metre, and 12 metre electric AC buses under its product portfolio, with an orderbook of 10,969 units on hand. The company also has testing grounds with its 6x4 electric tippers.

"This quarter (Q1FY25) will be subdued because we are in the process of transition. We are hoping the numbers will be in line with quarter four, or slightly better than quarter four.  We are targeting 150–200," Chandra continued.  

With the transition to its new plant already underway, the company is targeting selling 2000 units in FY25, followed by 5,000 units in FY26 and 10,000 units in FY27, wherein its existing orders will be completed, top executives added.