Tata CFO Balaji Pushes for asset-light model in e-bus procurement

Balaji's comments come in response to a query by Autocar Professional on Uttar Pradesh State Transport Corporation's recent tender for 5,000 electric buses on a net cost contract (NCC) basis.

By Shahkar Abidi, Ketan Thakkar and Kiran Murali calendar 10 May 2024 Views icon8426 Views Share - Share to Facebook Share to Twitter Share to LinkedIn Share to Whatsapp
Tata CFO Balaji Pushes for asset-light model in e-bus procurement

Tata Motors' Group CFO, P.B. Balaji, urged a shift towards an asset-light model for electric bus procurement in India. Speaking during a post-result conference call with the media, he argued that Original Equipment Manufacturers (OEMs) should focus on efficient operation rather than owning the vehicles under government tenders.

Balaji's comments come in response to a query by Autocar Professional on Uttar Pradesh State Transport Corporation's recent tender for 5,000 electric buses on a net cost contract (NCC) basis. The corporation aims to deploy 50,000 e-buses over the next 4-5 years. Under the NCC model, the financial risk falls on private operators who manage fare collection and cover operational costs.

Balaji emphasized the importance of an asset-light approach for OEMs in such large projects. With each e-bus estimated to cost around Rs 1 crore, the total investment for 50,000 buses would reach Rs 50,000 crore. "We don't have a balance sheet of that size. No OEM will have a balance sheet of that size" said Balaji. "Furthermore, it is not supposed to be on the balance sheet of OEMs but it should be on that of the leasing company" he added. 

Owning the buses would strain OEMs' financials and potentially impact stock prices, according to Balaji. "The entire returns metrics goes out of the window and that would see us pressure on the stock prices. So we have to be careful about that."

Balaji's comments highlight the ongoing debate around risk allocation in India's e-bus rollout. The government aims to accelerate electric bus adoption, but OEMs are wary of large upfront investments and operational risks associated with owning the vehicles. 
 

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