Mr. Tanesh Gagnani, Executive Director, Akasa Finance Limited

20 Jun 2022 , 11:12 AM

Can you explain the company's business model and key strengths?

Akasa Finance Limited is one of the country’s leading non-banking finance company (NBFC). It is an environment and social (ESG) centric NBFC, which uses finance as an intermediate to endorse conversion to electric mobility, reduce the carbon footprint of the country and finance the under-banked segments of society who are not able to consume formal banking channels and help them to mature their business and meet their personal needs. Our target is to empower an ecosystem where transformation to electric vehicles becomes easier for customers. We diligently work with manufacturers to guarantee the quality of products and are actively mounting our territorial range to ensure we can serve customers from the maximum area.

Have the recent incidents of EV bikes burning impacted demand?

The recent instances of electric scooters catching fire in India is certainly a setback for the steadfast penetration of electric mobility in the country and might also have an impact on India’s ambitious target of achieving 80% electric two wheelers on Indian roads by 2030 from 2% today. Though the sale of the electric two wheelers have more than doubled this year, the incidents of fire might create concerns among prospective buyers who might reconsider their plans to go electric. The electric vehicle sector is still at the nascent stage and holds huge potential for growth in India; hence, anything negative is certain to have a detrimental impact. However, despite minor hurdles the sector will continue to grow steadily and the annual sales are projected to cross 1 million units by March 2023 from just 1,50,000 a year ago.

What factors should customers and entrepreneurs consider before buying an EV?

The primary factor to be considered before purchasing an electric vehicle should be the charging scenario. Presently there are less than 2,000 public charging stations in India with concentration in a few states. Hence customers should always figure out whether there is a charging station along his / her commute route. However, India is likely to add around 48,000 additional electric vehicle chargers over the next few months. Customers can also opt for alternate options like installing a 240-volt-line charging station in their garage to charge the vehicle overnight. The range of the EV battery should also be considered to determine how far it can be driven on each charge. Another factor to be considered is cost, since many electric vehicles come with incentives. Also, each electric vehicle has its own unique set of features and designs and the driving experience differs from vehicle to vehicle. Customers should properly check which features suit them perfectly.

EVs are usually expensive, what is the government doing to subsidize the same? What more measures are needed?

The government policy reforms have been a major facilitator in the growth of financing in the EV sector. The Department of Heavy Industry (DHI) of the government has revised the Faster Adoption and Manufacturing of Electric Vehicles Phase II (FAME II), and increased the incentives on electric two wheeler vehicles from Rs 10,000 per kWh to Rs 15,000 per kWh. Also, the government’s Production Link Incentive (PLI) scheme worth Rs18,100 crores for investments in advanced chemistry cell battery manufacturing and Rs26,058 crore for automotive manufacturing of EVs has been a major boost for the growth of the industry.

What are the checkpoints before applying for an EV loan?

Different EV loans come with different features. Before applying for an EV loan, customers should carefully analyze and make sure that the financial institution they are selecting offers generous interest rate, reasonable processing fee, and flexible repayment time. Customers should also opt for loans in which the documentation process is hassle-free. For this it is suggestible to opt only for credible institutions. Customers should also remember that EV purchase can lead to consequent financial benefits. According to Section 80EEB of the Income Tax Act, there is a tax exemption of up to Rs1.5 lakh when settling a EV loan. Fee for issuance or renewal of registration certificates has also been exempted.

How are fintechs redefining the lending process for EV?

EV-financing fintech firms are offerings several innovative plans to help the customers with loans. Fintech companies these days are using biometrics and psychometric parameters to study customers’ personality and repayment patterns. The fintech companies are also collaborating with the banks to offer innovative financial schemes like flexibility to customers to opt out of EV within 12-24 months of purchase and offering low EMIs because of attractive interest rates.
 
What is the company's growth strategy?

Our basic strategy is to identify social and environmental friendly opportunities and convert them into profitable ventures for clients. We have financed a significant number of EVs in India in the last five years, exceeding 25k vehicles funded to date and present across five states in India. We are currently focused on expanding our geographical footprint and product range to meet the growing demand of shift towards clean mobility in the country. Our strategy is to provide top service to our dealers and competitive rates to our customers.