ICRA Grants First ‘Stable’ Rating to GMPL in EV Bus Segment India

ICRA has assigned [ICRA]A- (Stable) to Greencell Marudhara Private Limited, GMPL, the EV bus fleet operator for RSRTC in Rajasthan.

Investment Information and Credit Rating Agency of India Limited (ICRA) has assigned A- (Stable) to Greencell Marudhara Private Limited, GMPL, the electric vehicle bus fleet operator for the Rajasthan State Road Transport Corporation (RSRTC) in the state of Rajasthan.

In a press release yesterday, ICRA said, this rating has been the result of the fact that the Government of India (GOI) is focussing significantly on promoting electric vehicles as a cleaner and sustainable form of transportation. To encourage electric vehicle adoption in India, the GOI has introduced various programs over the years. National Electric Mobility Mission Plan 2020 (NEMMP 2020), introduced in January 2013 is one of them. As part of the NEMMP 2020, Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) scheme was launched by the Central Government in April 2015. After completion of the first phase, its Phase II (FAME II) became effective from April 1, 2019, for a tenor of three years with an expenditure of Rs. 10,000 crore.

Speaking of the rating, Mr. Shamsher Dewan, Vice President, ICRA Limited says, “We are delighted to announce ICRA’s first rating in the emerging EV segment. Considering the significant cost differential between conventional vehicles and EVs, the key driver for the adoption of EVs remain the incentives provided by the GOI. In this regard, GOI’s focus on promoting electric vehicles as a cleaner and sustainable form of transportation by providing capital subsidies remains positive. For faster penetration of EVs in India, India must develop a domestic EV manufacturing ecosystem as well.”

“Currently, the domestic production scenario is in its infancy and is limited to the assembly of imported components. However, given the localization targets applicable to the FAME policy, this is expected to put in place the local manufacturing expertise. Going forward we expect JVs between global EV OEMs and domestic partners,” he further said.

The FAME II marks demand generation by offering subsidies as incentives to reduce the capital investment associated with EVs. It aims to generate demand by way of supporting 7,000 Electric Buses (e-bus), through subsidized electricity tariffs, exemptions, or reductions on road tax, registration tax to reduce the capital investment associated with EVs.

The rating assigned for GMPL factors in its status as the successful concessionaire for procurement, operations, and maintenance of 48, 12-metre-long, fully built airconditioned electric buses on intercity routes for RSRTC, and its sponsor Green Growth Equity Fund. And the business model of such companies is expected to be defined by high revenue visibility and minimal traffic risk, entities paid at a fixed rate (in Rs./Km) for a minimum assured distance, subject to the assured bus availability, over a pre-defined contract period.

‘’We are pleased to get a credit rating for GMPL from one of the leading rating agencies in India, giving confidence to our investors and stakeholders. We aim to leverage the e-Mobility Market Opportunity and become a pan Indian shared electric mobility player,” said Mr. Ashok Agarwal, MD & CEO, Greencell Mobility, and the promoter of GMPL.

He further added “Initially we plan to own and operate city bus routes and charging infrastructure on longterm, take-or-pay Gross Cost Contracts (GCC) and subsequently expand into the business-to-consumer (B2C) intercity market, utilizing the cost advantage provided by EVs in high utilization routes.’’

GMPL is a 98.99% subsidiary of GreenCell Mobility, which in turn is the 100% subsidiary of GGEF which is a SEBI registered Category II Alternate Investment Fund. GreenCell Mobility has been incorporated to target the e-Mobility market opportunity and become a pan Indian shared electric mobility player.

As per ICRA, such projects will also limit the counterparty risk by the presence of an escrow mechanism, wherein the SRUs would be obligated to deposit the revenues from ticket collections while also maintaining some reserves to ensure timely debt servicing.