Tube Investments to invest up to ₹1,000 cr. to create four EV platforms

Tube Investments India Ltd (TI), which is moving aggressively on the electric-vehicle segment, is planning to invest up to ₹1,000 crore to create at least four platforms.

“We are seeing a lot of opportunities on the TI-2 side (optic lenses and electric three-wheelers)“, said Vellayan Subbiah, executive vice-chairman told analysts during an earnings call.

“So, obviously, the biggest area has been electric vehicles. It will be the biggest spend and so, over time, our vision is to get in at least four platforms,” he added.

During February last yar, the Murugappa Group firm had announced a three-pronged strategy to insulate itself from the cyclical nature of the auto sector.

According to the company’s classification, TI-1 refers to the existing divisions, TI-2 to a venture capital-led approach to growth such as expansion into optic lenses and electric three-wheelers and TI-3, growth through acquisitions.

Last month, the company had floated TI Clean Mobility Pvt. Ltd. to focus on electric vehicles and picked up a 70% stake in the Hyderabad-based e-tractor manufacturer Cellestial E-Mobility. It was followed by the acquisition of lPL Tech Electric Pvt. Ltd., the makers of e-heavy commercial vehicles (HVC).

Mr. Subbiah had announced the introduction of e3w, followed by tractor and HCV. While e3w is being produced in-house, tractor and HCVs would be made through acquisitions. Besides, TI was looking at a fourth platform as well. It might consume a large chunk of TI-2 capital, he added.

Explaining further, he said: “We are talking about roughly ₹250 crore each which means ₹1,000 crore outlay against four platforms in the market. Then we will see how the platform scales and then, accordingly where we need to double down and invest more.”

On a cautious note, he said: “We continue to hold the same prudence that we will not exceed two times free cash flow. So, I think, capital efficiency wise we will continue to maintain that. But, we definitely see a lot of opportunity in electric and we are going to invest in that.”

Asserting that they were more interested in the productive side of the spectrum than the consumptive side, he ruled out e2w as it is too crowded. “We do not see profit pools in that sector for the foreseeable future because there is just too much venture capital going on,” he said.

To a question, Mr. Subbiah said that they will have separate distribution networks for all the four products as the parts were different. “We have appointed dealerships. We have not started taking orders yet and I think we will likely start taking orders in the September time frame.”

According to him, the initial product range might not cover as much of the market but the largest is going to be that of 30-40 hp and 40-50 hp tractors. One product is closest to homologation right now and then there are two more products that would be submitted within the next six months.

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