The COVID-19 pandemic has forced many companies to cut funding in several of its overseas subsidiaries to conserve cash. But at the same time some start-ups in India have carried out a funding round and successfully raised capital the lockdown roadblock notwithstanding.
More on this later in the copy but here is a complete look at what else made headlines during the week
Green shoots in the economy
In what could be the initial signs of green shoots in the economy, demand for medium and heavy trucks are showing an uptick, after a prolong slowdown.
Tata Motors, Ashok Leyland and VE Commercial Vehicles, which control 95 percent of the medium and heavy commercial vehicle (goods) sales in India, said that demand for trucks used for mining, road construction and other activities has gathered pace.
Car sales rise in June
Dispatches of cars and SUVs to dealers more than doubled during June compared to May but are still less than half compared to their usual monthly level.
The industry recorded zero sales in April due to lockdown restrictions imposed to curb spread of the deadly coronavirus.
M&M, Ford explore new SUV platform
As sports utility vehicles (SUVs) continue to be a hot favourite with buyers, the joint venture of Mahindra & Mahindra and Ford has added yet another vehicle platform to the partnership that will spin off a model each for both the players.
Both companies are building SUVs which will be based on a common Ford Motor Company platform. These two new SUVs will be targeting the entry mid-size segment currently dominated by the Korean heavyweights Hyundai and Kia.
Motherson Sumi rejigs company
The Board of Directors of Motherson Sumi Systems (MSSL), India’s largest auto component maker, on July 2 approved a group reorganisation plan.
It said the reorganisation is aimed at realigning interests of all its stakeholders creating a simplified corporate structure for growth of businesses across product portfolios within auto components space and allied operations.
Maruti Suzuki pushes for car leasing
Maruti Suzuki has just launched a car leasing service in Gurugram and Bengaluru called Maruti Suzuki Subscribe.
Rolled out as a pilot programme in partnership with Orix, the service allows customers to lease out a car from Maruti Suzuki’s lineup. Unlike the company’s other schemes, Maruti Suzuki Subscribe is aimed towards individuals
Indian startups rake in the moolah
Bigger companies may be cutting off funding lines to their overseas subsidiaries but electric vehicle start-ups and allied businesses based within the country are attracting investments.
What is interesting is that these start-ups have managed to raise funds, in the last two months, amid the coronavirus pandemic when all of the multinational auto companies are focused on cutting back expenses and conserving cash.
The electric vehicle maker Euler Motors raised Rs 20 crore as a part of its ongoing Series A funding led by the Inventus Capital India. Other investors in this round are Blume Ventures, Singapore based Jetty Ventures India Investments, and Sujeet Kumar, the co-founder of Udaan.
The funds will be primarily used for hiring talents, research and development and launch of vehicles across the Indian key cities with a focus on localization of the supply chain.
Euler Motors is focused on launching, a one of its kind a last mile, light city truck powered by batteries. No company is India has commercially launch a battery-powered commercial vehicle.
Bengaluru-based Yulu Bikes, another electric vehicle maker, raised Rs 30 crore in equity funding led by US-based venture capital firm Rocketship and other existing investors.
The Bajaj Auto-backed company has developed electric bicycle as well as electric scooter which it gives on rent for the last mile connectivity in large cities.
The promoter of charging infrastructure start-up Charge+Zone, Tecso Charge Zone raised undisclosed capital from Mumbai Angels Network. Tecso Charge Zone is a subsidiary of Tecso Global, a Gujarat-based group.
Companies like Mahindra & Mahindra, Minda Industries and Tata Motors have announced massive cut backs in funding to their overseas subsidiaries. Mahindra, for instance, has shut down its electric scooter venture in the US while also seeking new partners for Korea’s SsangYong Motor Company.
“The COVID-19 scenario bought a stark focus on the overdependence of global supply chains on China. One way to overcome this is to boost our own EV ecosystem. While in the short term, there could be difficulty in fund raising for startups in mobility and battery compound segment. However, M&A/fund raising activities are likely to pick up in medium and long term considering these startups are crucial for developing the EV sector in India,” said a Deloitte release.
India is promoting the concept of ‘Atmanirbhar Bharat’ for which it is recognizing the contribution made by startups and the need to provide support to them. This comes at a time when the country has to depend heavily on China to source electric vehicle batteries or battery cells.
“To reduce dependency on China, Indian auto firms are expected to set up local manufacturing facilities thus, leading to enhanced requirement of funds and opening up opportunities for investors. Not only this while China maybe a leader in Lithium batteries, but Indian startups are also trying to find alternatives for manufacturing the batteries here,” the release added.