Tunwal E-Motors Introduction

Tunwal E Motors Limited is a 100% electric two-wheeler manufacturing company established in December 21, 2018. Their mission is to create smart, economical, and premium-designed electric two-wheelers that ride along with us into the future.

Brief about Tunwal E-Motors

Summary of the business of Tunwal E-Motors

Company was originally incorporated as “Tunwal E-Motors Private Limited” on December 21, 2018, Tunwal E-Motors Limited, founded in 2018, is one of the leading company in the EV 2-wheeler sector, committed to advancing innovation in EV 2-wheeler manufacturing. Over the years, we have achieved a 346% CAGR on revenue, introduction of more than 23 models including 7 variants of 2 wheelers, dealer base of over 225 across India and established a presence in 19 states.

History

Company was incorporated as “TUNWAL E-MOTORS PRIVATE LIMITED” on December 21, 2018.

Promoters & Board of Directors

• The Promoter of our company being Jhumarmal Pannaram Tunwal.

Board of directors

Share Holding pattern

Qualitative Factors

• Pure EV player with an admirable position in the fast-growing Indian E2W market
• Recognized brand in the eyes of the distributors and consumers
• Present in 19 states through a distribution channel
• Selling a wide variety of products which are well accepted in the market
• Simple and innovative designs
• Founder led company supported by a highly experienced and professional leadership team
• Manufacturing both high speed and low speed two-wheeler vehicles
• Cost efficient sourcing and locational advantage

Industry Outlook

Electric Two-Wheeler Market in India

India is one of the world’s fastest-growing markets for Electric Two-Wheelers (E2Ws). The two-wheeler segment dominates the Indian automobile market, accounting for more than 70% of all registered vehicles. E2Ws are a convenient and efficient mode of transportation for short-distance travel, especially in cities. In India, the two-wheeler segment accounts for more than 50% of all petrol transactions. Two-wheelers are utilised in commercial applications such as logistics fleets for food and groceries, parcel and courier services, and passenger transport-related services. Two- wheelers that can effectively negotiate traffic are also being tested for first and last-mile connection via shared trips and bike taxi services. According to a study, electric two-wheeler sales penetration in India might surpass 80% by 2030.

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Types of charging facilities for electric two-wheelers

Comparison Of Electric Two-Wheeler and Internal Combustion Engine (ICE) Two-Wheeler

Higher initial E2W costs may be attributed to the cost of the battery and other components, but the lower maintenance and fuel costs can outweigh the higher initial cost over time. Furthermore, E2W spare components are less expensive than those for regular ICE automobiles.

Key Players and Vehicle Category of the Electric Two-Wheeler Industry in India

As depicted in the left graph, the pie chart represents the market share of the top 7 largest private players offering E2W in the month of December 2022-23 in the Indian EV industry. Ola has the largest market share of 26% followed by TVS (14.5%) and Hero Electric with 12.5%.

As illustrated in the below donut chart, represents the vehicle category of electric two-wheeler models. Level 1 (L1) i.e., the low-speed E2W acquire 65.2% of the as compared to Level 2 (L2) i.e., the high-speed E2W.

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Opportunities

• Low cost of ownership
  • Any product or service must be affordable to be successful in India. The affordability of 2W among Indian households has been constrained by rising Total Cost of Ownership (TCO) and rising petrol prices, which have increased by 60% over the last five years. This is crucial for Indian users while deciding between EV and ICE 2W. The E2W makes economic sense for the Indian 2W users, as the total cost of ownership (TCO) is 20- 70% lower than an ICE equivalent 2W. Thus, the spurring demand for electric two vehicles is due to their greater efficiency and lower cost of electricity for charging it as compared to petrol or diesel.
• Accelerated Last mile deliveries
  • Over the years, there has been a significant increase in last-mile deliveries, and the pandemic has pushed this dependence even further on doorstep delivery. To meet this demand, last-mile delivery companies are increasingly turning to E2Ws, which offer a compelling economic proposition. Furthermore, E2Ws have a lot of potential for making the future more sustainable. As a result, these players are increasing the adoption of E2Ws.
• Better suited for busy cities
  • For many decades, two-wheelers (2Ws) have been the preferred means of transportation for cost-conscious Indians. This is due to their ease of manoeuvring on packed roads, reduced carbon emissions, and higher fuel efficiency. As a result, they are a cost-effective alternative to public transportation and 3 or 4-wheelers.
• Charging Infrastructure
  • Enhance charging infrastructure with government involvement, innovations in wireless charging and relax guidelines for operating stations are accelerating EV adoption.
• India’s Green Goals
  • At the COP26 Summit in 2021, Prime Minister Narendra Modi declared that India would cut its anticipated carbon emissions by one billion tonnes until 2030. In order to achieve this goal, India is moving towards the electric revolution by making electric cars the preferred form of transportation for most commuters.

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Government Initiatives

• FAME Scheme
  • The Government of India introduced the National Electric Mobility Mission Plan (NEMMP) 2020 in 2013 to offer a vision and roadmap for EV adoption and manufacture in the nation. The Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles (FAME) initiative was introduced as part of this strategy in 2015. The programme has since been extended to 2024 with a budget of US$ 1.3 billion. The budget includes funds for the construction of charging stations as well as up-front incentives to lower the cost of purchasing vehicles. The government has also granted US$ 122.05 million (Rs. 1,000 crore) incentives for the development of EV charging stations under the FAME II scheme. In 68 cities across India, 2,877 public charging stations have been installed. There will be 1,576 stations installed over 9 expressways and 16 highways. Other than these public charging stations, private players (such as Ather Energy, Charzer, Statiq, and others) have added 3000 charging stations.
• The Centre has announced a new scheme, the Electric Mobility Promotion Scheme (EMPS), 2024, to promote the sale of electric two-wheelers (e2W) and three-wheelers (e3W) in the country and the same may replace the FAME Scheme.
• Production Linked Incentives (PLIs) for Advance Chemistry Cells (ACC)
  • The government has invested around US$ 2.5 billion to this incentive scheme, which seeks to establish local manufacturing capacity of 50 GWh of ACC and 5 GWh of niche ACC capacity (planned). The programme intends to improve exports and generate economies of scale, helping big domestic and international manufacturers develop a competitive ACC battery production in India. To receive incentives under the programme, the government has agreements in place with three bidders, namely Reliance New Energy Solar, Ola Electric, and Rajesh Exports.
• Production Linked Incentives (PLIs) for Automobiles and Auto Components
  • The programme provides financial incentives to boost local manufacturing and attract investors into the car manufacturing industry’s value chain. This plan intends to lower costs and provide a reliable supply chain for goods made with cutting-edge automotive technology. The approved candidates, in addition to commercial entities from India, also came from Japan, Germany, the United States, the United Kingdom, and the Republic of Korea, Ireland, France, Belgium, the Netherlands, and Italy

Details of the new EV policy

• The Union Government has approved an E Vehicle Policy to promote India as a manufacturing destination for EVs. The policy is designed to attract investments in the EV space by reputed global EV manufacturers
• The policy entails a minimum investment of INR 41500 Mn (~USD 500 Mn) in India by setting up local manufacturing for EVs within 3 years. There is no cap on maximum investment
• The policy also specifies the required Domestic value addition (DVA) with a localization level of 250 to be achieved by the 3rd year and 500 by the 5th year
• Under the policy, a customs duty of 15 0 would be applicable on vehicles of minimum CIF (Insurance, Freight) value of USD 35000 (~INR 29 Mn) and above for a total period of 5 years subject to the manufacturer setting up manufacturing facilities in India within 3 years
• The policy paves the way for global EV OEMs to enter the Indian market, which was difficult earlier due to high import duties of 700 or 1000 depending on the vehicle’s value
• The duty foregone on the total number of EVs allowed for import would be limited to the investment made or INR 64840 Mn (equal to incentive under the PLI scheme) whichever is lower
• The policy has capped the number of EVs that can be imported by a company over the policy tenure to a total of 40 000 at the rate of not more than 8 000 per year, if the investment is USD 800 Mn (~INR 66 400 Mn) or more The carryover of unutilized annual import limits would be permitted
• The company will have to produce a bank guarantee to ensure timely adherence to the requirements The Bank guarantee will be invoked in case of non-achievement of the DVA and minimum investment criteria defined under the scheme guidelines.

Business Data

Verticals

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Revenue contribution from Geography presence

(₹ in Lakhs)

Distribution dependency

Machinery/Plants/Factory

We have a plot of 8000 sq. meter at E 123-124 RIICO Industrial Area, Palsana, Shikar wherein we have constructed our plant for manufacture/assembly of EV two wheelers. With more than 60000 sq. feet buildup space and with very good connectivity as it is located in an industrial area on the national highway. The infracture at the plant is adequate to produce 41000 units of EV two wheeler on an annual basis and there is space to further increase the production area if required. We also require a large space for mantaining the finished inventory at our plant.

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Capacity Utilisation

Competition

The two Wheeler EV space is evolving in India and the penetration of the same is getting wider and deeper. Just like us there are many operators and companies who have entered this space. A few of them consist of large listed companies who were earlier in ICE two Wheelers and now have forayed into EV two wheeler segment. Companies like Ward Wizard have a model similar to us and have been in the market for a greater time than us. The latest entrant in our industry are Ola Electric, Hero Electric and Ather which are unlisted.
We operate within a fiercely competitive industry landscape which is evolving. The market comprises a multitude of players offering services either independently or as integrated solutions. Established industry leaders pose significant competition, showcasing cutting-edge technology and innovative product offerings. In this competitive sector, a considerable portion is occupied by local, unorganized players who excel in cost efficiency, possess experienced staff, and prioritize personalized customer service, driving high levels of customer satisfaction. Additionally, both online and offline agencies are constantly emerging, introducing innovative approaches to provide similar services, contributing to a dynamic market with fluctuating demand and supply.
The competition is facilitating in creation of charging infrastructure which is necessary for the growth of our industry. It is pertinent to note that the two Wheeler EV industry is growing at a CAGR of 303% over the last three years.

Peer companies comparison

Group companies

• Tunwal E-Vehicles India Private Limited
• Proton Magnetic Energy Private Limited
• ELECT-EVTEC Solutions Private Limited

Business risk factors

• Tunwal E-Motors depend on third parties for the supply of raw materials and do not have firm commitments for supply or exclusive arrangements with any of suppliers. Loss of suppliers may have an adverse effect on Tunwal E-Motors business, results of operations and financial condition
• Tunwal E-Motors company is dependent on few international suppliers for purchase of raw materials. Loss of any of these suppliers may affect Tunwal E-Motors business operations.
• If Tunwal E-Motors are unable to anticipate, identify, understand and respond timely to rapidly evolving technological and market trends and preferences and develop new products to meet customers’ demands and to adapt to major changes and shifts in the automotive market, Tunwal E-Motors business may be materially adversely affected.
• If Tunwal E-Motors electric vehicles contain defects, do not perform as per industry standards and/or fail to meet the performance levels as advertised, our brand and reputation and ability to develop, market and sell our electric vehicles could be adversely impacted, and we may be compelled to undertake product recalls or similar corrective actions and face legal actions taken against Tunwal E-Motors.
• Tunwal E-Motors could experience defects, quality issues or disruptions in the supply or increase in prices of components used in electric vehicles thus increasing material costs and the price of electric vehicles and impacting our projected manufacturing, delivery timelines and profitability.

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Financials

Key Financial Ratios

Key Performance Indicators

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Balance Sheet

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Profit & Loss

Cash Flow

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Capital structure

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SWOT

• Strengths:
  • Product Range: Tunwal E-Motors offers a diverse range of premium electric bikes catering to various consumer needs.
  • Dealer Network: With around 256 dealers across India, they have a strong distribution network.
  • Manufacturing Capacity: Their Palsana plant can produce up to 41,000 units.
  • Agility: The company adapts products based on consumer requirements and futuristic technologies.
• Weaknesses:
  • Limited Market Share: As a relatively new player, Tunwal E-Motors faces competition from established brands.
  • Employee Count: With only 64 permanent employees, scaling up may be challenging.
• Opportunities:
  • Growing EV Market: India’s shift toward EVs presents a significant growth opportunity.
  • Awareness and Adoption: As awareness increases, more consumers may choose electric two-wheelers.
  • Research and Development: Investing in R&D can lead to innovative products and features.
• Threats:
  • Competition: Established players and new entrants pose a threat.
  • Regulatory Changes: Evolving regulations can impact the EV industry.
  • Supply Chain Disruptions: Dependence on suppliers and logistics challenges.

IPO Details

Tunwal E-Motors Limited IPO Details

Object of the issue

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Litigation involved

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