JSW Group abandons EV plan
JSW Group has abandoned its plans of entering the electric vehicles space owing to the high risks involved, the company said in a regulatory filing.
MUMBAI: More than 18 months after announcing its intentions to enter the electric vehicles manufacturing space, Sajjan Jindal-led JSW Energy has abandoned this plan owing to high uncertainties associated with the business as well as to maintain capital for growth opportunities in the power sector.
The company had earmarked Rs 6,500 crore for this venture and was in advanced talks with General Motors to acquire the latter’s manufacturing facility in Talegaon, near Pune, had reported on March 2.
Calling the move as ‘prudent risk management’, the company in an exchange filing said, “…given higher than anticipated uncertainties associated with the EV business, the Board has, after careful evaluation, decided not to pursue this business and maintain capital cushion for growth opportunities in power and other related businesses.”
This move comes barely few days after the department of heavy industries and NITI Aayog released the second phase of Faster Adoption and Manufacturing of Electric (and Hybrid) vehicles (FAME) policy that ended subsidy for private buyers of electric four-wheelers. Industry experts say this acted as a catalyst for the company’s decision to pull the plug on its plan.
JSW Energy has also been eyeing acquisitions in the power sector for which it needs to conserve minimum capital of Rs 1,000 to Rs 1,200 crore, analysts said. It is also reviving a 240 MW power plant in Himachal Pradesh with an estimated investment of Rs 2,500 crore.
An email query sent to Prashant Jain, joint MD of JSW Energy remained unanswered till press time on Friday.
Jain had told analysts during the company’s last earnings announcement that the company was ‘quite satisfied’ with its progress in terms of mitigating risks arising due to JSW Energy’s lack of experience in the passenger vehicles space. The company had spent only Rs 25 crore out of the allocated investment in 2018-19. It had planned to announce a concrete plan regarding this venture by the end of March-quarter, Jain said during the same conversation. ET has viewed a transcript of the management’s interaction with analysts.
The company was also said to be putting together a team to develop an electric vehicle portfolio. It had hired Sergio Rocha, former head of GM in South Korea, as chief operating officer for the division. A top Hyundai Motor India executive was hired to handle the sales and marketing function.
People aware of the $13 billion group’s activities had called the electric vehicle business Sajjan Jindal’s “pet project” as the group otherwise has no presence in the automotive business.
Source: auto.economictimes.indiatimes
