Tata Motors Units Secure Rs 837 Crore For E-Bus Operations In FY24

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The subsidiaries—TML Smart City Mobility Solutions Limited, TML CV Mobility Solutions Limited, and TML Smart City Mobility Solutions J&K Private Limited—secured funding for 8-10 years linked to Gross Cost Contract (GCC) projects.

According to Tata Motors Ltd.’s annual report, three of its subsidiaries—TML Smart City Mobility Solutions Limited, TML CV Mobility Solutions Limited, and TML Smart City Mobility Solutions J&K Private Limited—have successfully raised a total of Rs 837 crore in long-term financing for electric bus operations. These funds, with an 8-10 year tenure, are designated for Gross Cost Contract (GCC) projects, where Original Equipment Manufacturers (OEMs) are compensated on a per-kilometer basis, and the governing body handles fare collection. Additionally, banks have provided Rs 50 crore in fund-based working capital limits.

GCC contrasts with the Net Cost Contract (NCC) model, where OEMs also manage fare collection, posing a higher financial risk. This comes as Tata Motors’ Group CFO, PB Balaji, advocates for an asset-light operational model in response to a new 5,000 electric bus tender from the Uttar Pradesh State Transport Corporation, part of a broader aim to deploy 50,000 e-buses within 4-5 years. Under the NCC model, private operators bear the cost and risk of operations.

Balaji emphasizes the need for OEMs to maintain an asset-light stance to manage large-scale projects effectively without overwhelming their financial capabilities. He noted that with each e-bus costing about Rs 1 crore, the investment for 50,000 buses would total Rs 50,000 crore, a figure unmanageable for any OEM’s balance sheet. He cautioned that owning the buses could severely impact OEMs’ financial health and stock prices.

This discussion underscores the ongoing challenge of risk distribution in India’s push towards electric bus adoption, highlighting the industry’s hesitation towards significant upfront investments and the operational risks of vehicle ownership.

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