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Informist, Wednesday, Mar. 26, 2025

 

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--Ashok Leyland: Won't exit European market, just trying to cut losses 
--CONTEXT: Ashok Leyland's bus arm in talks to cease mfg ops in UK 
--CONTEXT: Comments by Ashok Leyland's mgmt during analyst conference call 
--Ashok Leyland: Switch Mobility will achieve EBITDA break-even in FY25 
--Ashok Leyland: Not averse to raising equity, but there is no urgency 
--Ashok Leyland: Timing of fundraising is important, waiting for right time 

MUMBAI – Ashok Leyland Ltd. Wednesday said its UK-based stepdown subsidiary Switch Mobility Ltd.'s board approved the commencement of consultation process with employees which could potentially lead to cessation of its manufacturing and assembly activities at its Sherburn facility. This decision was taken in the wake of continuing general economic uncertainty within the overall bus manufacturing sector in the UK and consequent inability to derive the benefits of scale, Ashok Leyland said in an exchange filing. However, Switch Mobility has no plans to exit the UK market, it said.

 

Switch Mobility will execute and complete all the orders on hand and will continue to provide aftermarket and service support from two other facilities in Rotherham and Thurrock for the existing vehicle parc, according to the filing. Switch Mobility is a manufacturer of electric buses with its presence across the UK and Europe. 

 

The company is not planning to exit the UK market but to scale down its operations so that it can reduce losses of Switch Mobility, Ashok Leyland's management said in a conference call on Wednesday. Lower volumes with an uncompetitive cost structure due to market variations and varied product challenges have made the operations of Switch Mobility in the UK unviable, Ashok Leyland said. 

 

Switch Mobility contributes 0.60% of the consolidated turnover of Ashok Leyland, it said in the filing. Ashok Leyland estimates the losses of Switch Mobility to be around 20 million pounds sterling ($25.77 million)-21 million pounds sterling currently for 2024-25 (Apr-Mar).

 

The consultation process with employees that starts on Wednesday is expected to last for 45 to 90 days. The management expects the losses of Switch Mobility to go away soon, if the consultation leads to a cessation of the manufacturing and assembly activity of Switch Mobility in the UK.

 

The company is contemplating ways to produce products for the UK and European markets, the management added. Further, some employees of Switch Mobility will be retained even after the potential cessation of the manufacturing operations, as it will continue its aftermarket operations, the management said. Switch Mobility has a total of 240 employees in the UK.  

 

However, the Indian business of Switch Mobility is expected to achieve earnings before interest, tax, depreciation, and amortisation break-even in FY25. This is on the back of doubling electric-bus volumes, electric light commercial vehicle volumes crossing 1,000 units within one year of launch and revenue more than doubling in FY25, the management said. 

 

Further, the company expects its electric-bus volumes in India to treble in FY26 on the back of more than 1,300 orders in hand. In the electric light commercial vehicle space, the company has already achieved a market share of more than 80% and sees 50-80% volume growth in FY26. 

 

On a further equity infusion to Switch Mobility, the management said they are not expecting any further and immediate equity infusion as the equity infusion approved in February would be sufficient to meet its cash flow needs. Notably, there is also a net debt of around 80 million pounds sterling on the books of Switch Mobility, which needs to be repaid by 2029. However, Ashok Leyland sees the potential ceasing of the manufacturing operations of the company to not have any bearing on the repayment terms. On Ashok Leyland's broader electric bus business, the management said it is not averse to raising equity but is waiting for the right time.  

 

For the December quarter, Ashok Leyland reported a net profit of INR 7.62 billion on revenue of INR 94.79 billion. Wednesday, shares of the company closed 2.4% higher at INR 214.98 on the National Stock Exchange.  End

 

US$1 = INR 85.70 

 

Reported by Alina Geogy and Arya S. Biju

Edited by Deepshikha Bhardwaj

 

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