The Society Of Manufacturers Of Electric Vehicles (SMEV), in its report, released highlights of a cursory audit on behalf of seven E2W OEMs affected by the decision of the Ministry of Heavy Industries (MHI) to block FAME subsidies.
The audit by SMEV’s chartered accountants indicates that the total cumulative damages to affected companies could account for over INR 9,000 crore on a conservative basis.
A press release from SMEV noted that the cursory audit estimates cumulative losses on account of unpaid dues, interest, debt, loss of market share, reputational loss, cost of capital and potential recapitalisation to approximately INR 9,075 crore ever since the MHI held up their subsidies since 2022.
SMEV noted that while these need to be formally audited to establish an exact figure, most OEMs agree that these are by far more conservative than realistic, and some of the OEMs may never recover, and some may wind up.
Sanjay Kaul, Chief Evangelist – SMEV, said it appears that the OEMs have a serious predicament because apart from the monies held up for 18-22 months as unpaid subsidies and the subsequent claim of MHI to claw back older subsidies, their new models have not been allowed to be uploaded on the NAB portal – in effect blocking them from doing any business at competitive prices.
“It has to be admitted that this is prima facie unsustainable. I propose that these companies having suffered enough and having paid any penalties due many times over in sheer losses, may kindly be absolved and permitted to continue to do business,” he added.
Highlighting the need for a speedy resolution, Kaul pointed out that it is ironic that while the industry engages with prospective investors about deploying $1 billion in the Indian EV sector, the losses already correspond to almost the same amount of money for the troubled E2W OEMs.
In a letter to the MHI Minister, Mahendra Nath Pandey, SMEV states that the OEMs are reaching breaking point owing to daily mounting losses. The letter proposes that if the Ministry intended to punish these OEMs, this delay is practically finishing them as this punishment has continued for over 22 months, which itself is a crime.
SMEV proposes the creation of a ‘Sinking Fund’ by the Ministry to help OEMs on the brink of closure get back on their feet through soft loans, grants or other such mechanisms that can revive them as it falls within MHI’s ambit to build the EV eco-system through financing initiatives.
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