Company procuring electric vehicles for govt firms sees worst performance in five years

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The net profit of the Centre-promoted, unlisted Energy Efficiency Services Ltd (EESL), which procures electric cars and LED street lights, and sets up electric vehicle charging stations, recorded its worst financial performance in five years in FY20.

EESL leases cars to NTPC, Power Finance Corporation and several other government-owned entities.

Classified as an Energy Service Company, which is responsible for designing, retrofitting and implementing projects, EESL recorded a net profit of just Rs 34.51 crore in FY20, a slump of 54 percent compared to FY19, as per its disclosures.

Worst performance since 2015

Mounting receivables from public sector undertakings (PSUs) and ballooning finance costs are the main reasons behind the fall in profits during FY20. This is EESL’s worst net profit since FY15 when the company reported a profit of Rs 9.05 crore.

EESL has stated that it earns revenue mainly from government-controlled entities (both central and state governments). Such government-controlled companies and other customers owe Rs 1,036 crore to EESL for a period of more than 360 days as on March 31, 2020. Total receivables by the end of the same year are Rs 2,800 crore.

Part of EESL’s responsibilities is to procure electric vehicles and provide them on lease to PSUs. Tata Motors, Mahindra & Mahindra, Hyundai and MG Motor have won contracts from EESL.

Procurement order slashed

In FY20, EESL slashed the EV procurement order by a whopping 70 percent to 3,000 units from an ambitious target of procuring 10,000 electric cars. Tata Motors and M&M bagged all those orders for the Tigor EV and e-Verito, respectively.

In the first week of this month, EESL announced the procurement plan of 250 electric vehicles from Tata Motors and Hyundai, estimated to be worth around Rs 40-45 crore.

What formed the deal was 150 electric Tata Nexons and 100 Hyundai Konas. EESL claims that it has so far deployed a fleet of 1,514 EVs, which have travelled 3 crore km resulting in fuel savings of Rs 13.59 crore.

Founded in 2009, EESL is promoted by the Ministry of Power, Government of India, as a joint venture between four PSUs -- NTPC, Power Finance Corporation, REC and POWERGRID Corporation of India.