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K Giriprakash

BANGALORE, May 27

INTERNATIONAL Finance Corporation (IFC), the World Bank's private sector lending arm, expected to pick up a stake in India's first electric car company, Reva, at a substantial premium.

"We are negotiating the details as the valuation is under way," the Reva Electric Car Company Managing Director, Mr Chetan Maini, told BusinessLine. Apart from IFC, Reva is planning to rope in other financial institutions to raise around Rs 70 crore for funding its expansion project, which includes several new models, a bigger version of Reva and a vehicle for public transport. Reva has already invested around $20 million in the company so far.

Mr Maini said IFC had expressed interest in investing in the company for quite sometime. He said the company has at least 10 patents and has been able to develop the required technology at a much cheaper cost than others. He said certain international auto majors have bought electric car companies at a lower valuation but had to pump in more funds than the acquisition cost itself to make it a viable proposition. "But what we have is proven technology. We have a ready market and our cars have received extremely good response," Mr Maini said. The company plans to tie up funding within a couple of months.

Mr Maini said the company plans to expand its capacity to 50,000 cars in another five years. Reva recently expanded the capacity from 1,500 cars to 6,000 cars to meet the future demand. "We produce around 50 cars every month which is expected to go up to 250 by March 2004," Mr Maini said.

Currently, the Maini Group holds 70 per cent equity while the rest is with the US-based AEV. The company has also already raised funds from ICICI Bank, Technology Development Bank and the Karnataka State Finance Corporation in the form of debt.

He said that the company reviewed its plans recently because of the encouraging response it received from the UK, Europe and the US. . "Our electric cars are at least one-third cheaper when compared with similar kind of cars manufactured by international auto majors," Mr Maini said.

He said the company plans to launch newer versions of the car both for domestic as well as for the export market. He said the UK was the biggest market outside India. Reva has already appointed Going Green as its distributor in the UK. It has exported 15 cars for test-driving in the UK.

Mr Maini said the electric cars are exempt from the controversial congestion tax in London, which leads to an immediate saving of Rs 350 per day. In certain parts of London, parking fee is waived of for electric vehicles. He said even other European countries are seriously examining introduction of small electric vehicles to reduce pollution and traffic congestion.

Mr Maini said the company has so far sold over 400 cars since its launch a couple of years ago with its high-end model, Classe priced at Rs 3.06 lakh being the highest selling variant. The base model is priced at around Rs 2.37 lakh. "We hope to hit operation break even by next March," Mr Maini said.

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