Covid pandemic accelerating EV adoption in India

Fintech firm RevFin with a niche focus on electric vehicle space sees this year as the inflection point for growth as the current pandemic accelerates the pace of EV adoption in the country. On the back of the demand uptick, the fintech firm plans to increase its loan disbursement by 10 times to around Rs 150 crore in the next financial year. In an exclusive interview with Bizz Buzz, Sameer Aggarwal, founder & CEO of RevFin said the company plans to raise equity funds from investors in the coming months in order to meet the rising demand for EV loans

We have hardly done any disbursement this year. The total number of loans this fiscal is around 1,200. But next fiscal, we plan to do 15,000-20,000 disbursements. So, we have done Rs 15 crore of disbursements as of now and we plan to do Rs 100 crore- Rs 150 crore of disbursements next financial year

We raise debt funds from NBFCs. Currently, we have tie-ups with two NBFCs, and hopefully, we will tie up with three more in the next six to nine months. Currently, we have a debt-to-equity mix of 50:50. But we want to move to a funding level where one-third will be equity and two-third will come from debt

There are a lot of policy announcements from the government for promoting the adoption of electric vehicles (EVs) in recent months. Do you feel this is the inflection point of growth for a fintech firm like RevFin, which is lending into this sector?

Of course, this is the inflection point. But it is not necessarily due to the government policies though some policies will act as a facilitator. The evolution of EV in India are e-riskshaws or low-speed three-wheelers. These vehicles are very popular in all of northern India and eastern India. Right from Delhi, Haryana, Rajasthan, Punjab to West Bengal, and Assam, around two million such vehicles are on road. And none of this happened due to policy or concerns for the environment. These happened because the economics of the vehicle makes a lot of sense. These vehicles are available at Rs 1.20 lakh to Rs 1.5 lakh price range. Even someone living in small towns of UP or Bihar can easily make Rs 15,000-Rs 20,000 per month. So, the return on the vehicle is pretty huge. Also, if someone is able to get that vehicle financed by paying a down payment of Rs 35,000-Rs 40,000 and can earn Rs 15,000-Rs 20,000 per month, it becomes a fantastic investment. Secondly, the earnings per month in small towns from these vehicles help them to go up a few notches in the social ladder. So, there is a huge change in the lives of people due to these vehicles.

However, what has been seen in northern and eastern parts of India, is not seen in western and southern regions of the country. The popularity of these vehicles has not been replicated in these regions. That is because the efficiency of these vehicles is not that great in hilly terrain. In many places in southern and western parts of India, these vehicles don't do that well.

Has the pandemic accelerated the pace of adoption of EVs in India?

In many small towns of UP or Bihar, there has never been the availability of last-mile mobility options. So, these towns have leapfrogged to EVs directly. Now, what has happened is that during the pandemic, the demand for last-mile delivery has come up even in small towns. In metro cities, we are quite used to micro delivery of goods from ecommerce or foodtech players. However, that is not the case in small towns. The pandemic has changed that. Now even in small towns, there has been demand coming up for grocery delivery or delivery of goods from Amazon or other players. So, when the demand is coming up, everyone is looking towards electric vehicles for last-mile delivery. It is driven mostly by economics of these vehicles.

Apart from this factor, even players like Amazon, Flipkart, Zomato, Swiggy are moving towards electric vehicles. Their motivation is different including pollution, government policy, and corporate social responsibility among others. The third aspect is due to the government policy. These policies help in creating awareness. However, these policies per se don't have a lot of impact on the adoption of these vehicles. Last three-four months, there has been so much happening in the EV space that we are talking to so many people now in the ecosystem. So, the lockdown has accelerated this space.

Will Revfin's lending portfolio reflect the uptick in demand for EVs? What will be your disbursement in the coming financial year?

We have hardly done any disbursement this year. The total number of loans this fiscal is around 1,200. But next fiscal, we plan to do 15,000-20,000 disbursements. So, we have done Rs 15 crore of disbursements as of now and we plan to do Rs 100 crore- Rs 150 crore of disbursements next financial year. The reason for such optimism is because of high demand and our partnerships with other stakeholders.

How is the capital position now at RevFin? Will you be able to fund such a jump in disbursements?

We don't have that much capital now. But we raise funds at regular intervals. We are in the process of raising some funds now. Then, we may look at raising another round of funds in the next six to nine months.

Do you have any tie-ups with banks or NBFCs for raising debt funds?

We raise debt funds from NBFCs. Currently, we have tie-ups with two NBFCs, and hopefully, we will tie-up three more in the next six to nine months. Currently, we have a debt-to-equity mix of 50:50. But we want to move to a funding level where one-third will be equity and two-third will come from debt.

RevFin has a diversified portfolio of loan offerings. Will you tap all loan instruments or focus on a few?

We have a good product stack. But we will not necessarily focus on all the products. We want to stay as a niche player.

You recently said that RevFin wants to adopt the hybrid operating model. Will it be feasible?

Yes, we plan to follow a hybrid work model. What we want is everybody should at least work from home once a week. If anybody wants more than that, he will be free to do that. So, we don't want to ask everybody to come to the office every day.