Press Release

Tecso Charge Zone Limited

December 08, 2023

Facilities/Instruments Amount (₹ crore) Rating1 Rating Action

Reaffirmed at CARE BB; Stable / CARE A4

Long Term / Short Term Bank Facilities - -
and Withdrawn
Details of instruments/facilities in Annexure-1.

Rationale and key rating drivers

CARE has reaffirmed and withdrawn the outstanding ratings of ‘CARE BB; Stable/ CARE A4’ [Double B; Outlook: Stable/ A four]
assigned to the bank facilities of Tecso Charge Zone Limited (TCZL) with immediate effect. The above action has been taken at
the request of TCZL and declaration received from the company that the rated proposed facilities have not been utilized for
mobilization of funds.
The ratings assigned to the bank facilities of TCZL are constrained by its small scale of operations, thin profitability with cash loss
reported in FY23, weak debt coverage indicators, risk associated with large size capex planned and highly capital intensive nature
of business. It is further constrained by competition from large players and susceptibility of profitability to volatile raw material
prices and foreign exchange risk.
The ratings, however, derive strength from its experienced promoters, growing network of charging stations with various
corporate tie-ups, successful track record in raising equity resulting in moderate networth base and moderately leveraged capital
structure.

Analytical approach: Standalone

Outlook: Stable
The ‘Stable’ outlook reflects CARE Ratings Limited’s (CARE Ratings’) expectation that the company shall continue to benefit from
extensive experience of the promoters in the field of energy and power industry.

Detailed description of the key rating drivers:

Key weaknesses
Small scale of operations with thin profitability
Company is in nascent stage of operations and in its four years of operations, TOI grew from Rs.15.84 crore to Rs. 46.93 crore
in FY23 albeit remained at modest level.
The PBILDT margin of the company declined from 4.02% in FY22 to 0.45% in FY23 due to high raw material cost. Furthermore,
with lower operating profit and higher interest cost, TCZL reported cash loss of Rs.1.76 crore in FY23 as against cash profit
Rs.0.69 crore in FY22.

Risk associated with large size capex planned

TCZL is planning to set up more than 2800 charging stations in B2C and more than 5000 charging stations in B2B in the next two
years with the project cost of ~Rs. 1125 Crores funded from Rs. 750 crore as equity and Rs. 375 crore as debt in next two years
ended FY25 to establish their charging stations all over the country, procuring EV charging equipment and to start battery
replacement services. However, the EV industry is emerging industry and the setting up of charging station would be subject to
the growth of EV industry in India.

Highly capital intensive industry and competition from large players

India’s EV market currently has limited capabilities for fast charging EV’s, which has created an opportunity for this industry for
multi-fold growth. The cost of setting up an EV charging station is quite high and varies according to the type of chargers being
installed. In addition to this, real estate availability is also a challenge. Thereby, setting up a charging station, being a capital-
intensive exercise with no immediate returns, requires financial assistance.
The EV industry as well EV charging/battery industry has presence of large players like Jio-BP, ABB Limited, Tata Power, Fortum
India, etc. These are some big players who have tied-up with petrol pumps as well as auto manufacturing companies. As these
players have large amount of capital in hand, it poses challenge to the small and medium size players.

1
Complete definition of the ratings assigned are available at www.careedge.in and other CARE Ratings Ltd.’s publications

1 CARE Ratings Ltd.

Press Release

Susceptibility of profitability margins to volatile raw material prices and foreign exchange risk
The company being present in EV industry is primarily impacted by the metal prices and consequent infra setup costs. Also, parts
are imported from neighbouring countries including China which has impacted the supply side as well. It also has small income
from battery replacement services in three wheelers whose prices are linked to lithium ion price.
TCZL plans to raise debt in form of ECBs while its earnings are in domestic market exposing its profitability to forex fluctuations
in absence of active hedging policy.

Key strengths
Experienced promoters
TCZL is founded and operated by Mr. Kartikey Hariyani, who is an electrical engineer with more than two decades of experience
in the energy and power industry. He is supported by Mr Ravindra Mohan, an electrical engineer with more than four decades of
experience in the energy sector and engineering services with L&T and BHEL for large scale project execution, Mr. Ravin
Mirchandani, an MBA from Queensland University of Technology and executive chairman of Ador Powerton limited, with more
than three decades of experience in technology and energy and Mr. Rupesh Shah, who has more than three decades of experience
in software development, system design for the web-applications including business and e-commerce.

Growing network of charging stations with presence in various states and tie-ups with various players
TCZL is a growing company and is establishing its networks in various states. The company sets up their stations in highways,
hotels, etc for passenger vehicles and has tied-up with commercial vehicle players like Ashok Leyland and municipal authorities
to set up charging stations at their depots. Further, the company has recently tied up with Mercedes Benz and HPCL to set up
charging stations at their stations and dealerships. TCZL has also set up their charging stations at highways, hotels, etc.

Successful track record in raising equity resulting in moderate networth base and moderately leveraged capital
structure albeit weak debt coverage indicators
TCZL has already raised ~Rs. 87 crore in the form of equity shares, compulsorily convertible preference shares and optionally
convertible and redeemable preference shares until H1FY23 via various funding rounds. The capital structure of the company
remained moderate as reflected by overall gearing of 0.30x (PY: 0.06x) as on March 31, 2023. The debt profile of the company
as on March 31, 2023 comprised of total debt of Rs. 28.86 crores comprising of External Commercial Borrowings (ECB) and
unsecured loans from NBFC. With cash loss, debt coverage indictors of the company weakened with interest coverage of 0.21x
in FY23 as against 2.84x in FY22.

Good growth prospects in the EV industry

With rising crude prices and an aim on reducing dependence on fossils fuels, there is increase focused on alternative fuel options
in India for automobile industry, due to which, EV has picked up pace in last 5 years. Government subsidies and initiatives to shift
to sustainable options have also boosted demand. However, higher investment outlay, battery replacement costs and setting up
charging infrastructure are the key impediments for the EV growth in India.
Concerns over battery replacement cost are being tried to be addressed though longer warranties as well many new-age EV
companies have announced buyback offers for their products after battery warranty expiry (normally three years). For charging
infrastructure, it is being developed by a mix of private and public efforts (Charging stations at dealer network, petrol pumps,
hotels, gated societies etc.) but same is in nascent stage. All this points to a strong demand environment, but constraints in
supply chain also pose a hurdle for ramping up EV production
Government subsidy for Electric Vehicle under FAME II
Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India (FAME-India) Scheme was launched in 2013 under
National Mission on Electric Mobility in 2011/ National Electric Mobility Mission Plan 2020. The scheme aims to encourage
progressive induction of reliable, affordable and efficient electric and hybrid vehicles.

Liquidity: Stretched
The company had stretched liquidity with cash loss reported in FY23 and term debt of Rs.28.86 crore as on FY23 end. Liquidity
is however supported by free cash and bank balance of Rs. 7.49 crore as on March 31, 2023.

2 CARE Ratings Ltd.

 Press Release

Applicable criteria
Policy on default recognition
Financial Ratios – Non financial Sector
Liquidity Analysis of Non-financial sector entities
Rating Outlook and Credit Watch
Short Term Instruments
Manufacturing Companies
Policy on Withdrawal of Ratings

About the company and industry

Industry classification
Macro Economic Indicator Sector Industry Basic Industry
Industrials Capital Goods Electrical Equipment Other Electrical Equipment
Incorporated in 2018, Tecso Charge Zone Limited is start-up company for venturing into Electric Vehicle (EV) Charging industry
with Electric vehicle charging technology based on IOT and uses cloud services to provide charging solutions. TCZL is founded
and operated by Mr. Kartikey Hariyani, who is an electrical engineer with more than two decades of experience in the energy and
power industry and has raised various rounds of private equity funding.
Tecso is setting up EV charging infrastructure (Fast DC Charging) in India and has built app-based (Charge zone) software
solutions to operate unmanned charging stations with remote control and monitoring and on app payment provisions. These
services are provided to EV car owners, fleet operators, transportation companies, corporate business parks, hotels etc.
CHARGE+ZONE’s charging stations are rapid DC charging points with the CCS2 charging protocol that provides 80-100% charge
in 20-30 minutes and full charge in an hour depending on the EV’s battery size.
Brief Financials (₹ crore) March 31, 2022 (A) March 31, 2023 (A) H1FY24 (UA)
Total operating income 15.84 46.93 NA
PBILDT 0.64 0.21 NA
PAT -4.15 -9.89 NA
Overall gearing (times) 0.06 0.30 NA
Interest coverage (times) 2.84 0.21 NA
A: Audited UA: Unaudited; NA: Not Available; Note: ‘the above results are latest financial results available’

Status of non-cooperation with previous CRA: Not Applicable

Any other information: Not Applicable

Rating history for last three years: Please refer Annexure-2

Covenants of rated instrument / facility: Detailed explanation of covenants of the rated instruments/facilities is given in
Annexure-3

Complexity level of various instruments rated: Annexure-4

Lender details: Annexure-5

Annexure-1: Details of instruments/facilities

Date of Maturity Size of the Rating Assigned
Name of the Coupon
ISIN Issuance (DD- Date (DD- Issue along with Rating
Instrument Rate (%)
MM-YYYY) MM-YYYY) (₹ crore) Outlook

Fund-based-LT/ST - - - 0.00 Withdrawn

3 CARE Ratings Ltd.

 Press Release

Annexure-2: Rating history for the last three years

Current Ratings Rating History
Name of the
Date(s) Date(s) Date(s) Date(s)
Sr. Instrument/
Amount and and and and
No. Bank
Type Outstanding Rating Rating(s) Rating(s) Rating(s) Rating(s)
Facilities
(₹ crore) assigned in assigned in assigned in assigned in
2023-2024 2022-2023 2021-2022 2020-2021
1)CARE BB;
Fund-based- Stable /
1 LT/ST* - - - - -
LT/ST CARE A4
(02-Dec-22)
*Long term/Short term.

Annexure-3: Detailed explanation of covenants of the rated instruments/facilities: Not Applicable

Annexure-4: Complexity level of the various instruments rated

Sr. No. Name of the Instrument Complexity Level
1 Fund-based-LT/ST Simple

Annexure-5: Lender details

To view the lender wise details of bank facilities please click here

Note on the complexity levels of the rated instruments: CARE Ratings has classified instruments rated by it on the basis
of complexity. Investors/market intermediaries/regulators or others are welcome to write to care@careedge.in for any
clarifications.

4 CARE Ratings Ltd.

 Press Release

Contact us

Media Contact Analytical Contacts

Mradul Mishra Kalpesh Ramanbhai Patel

Director Director
CARE Ratings Limited CARE Ratings Limited
Phone: +91-22-6754 3596 Phone: 079-40265611
E-mail: mradul.mishra@careedge.in E-mail: kalpesh.patel@careedge.in

Relationship Contact Anuja Parikh

Assistant Director
Ankur Sachdeva CARE Ratings Limited
Senior Director Phone: 079-40265616
CARE Ratings Limited E-mail: anuja.parikh@careedge.in
Phone: 91 22 6754 3444
E-mail: ankur.sachdeva@careedge.in Jinil Gandhi
Lead Analyst
CARE Ratings Limited
E-mail: Jinil.Gandhi@careedge.in

About us:
Established in 1993, CARE Ratings is one of the leading credit rating agencies in India. Registered under the Securities and
Exchange Board of India, it has been acknowledged as an External Credit Assessment Institution by the RBI. With an equitable
position in the Indian capital market, CARE Ratings provides a wide array of credit rating services that help corporates raise capital
and enable investors to make informed decisions. With an established track record of rating companies over almost three decades,
CARE Ratings follows a robust and transparent rating process that leverages its domain and analytical expertise, backed by the
methodologies congruent with the international best practices. CARE Ratings has played a pivotal role in developing bank debt
and capital market instruments, including commercial papers, corporate bonds and debentures, and structured credit.

Disclaimer:
The ratings issued by CARE Ratings are opinions on the likelihood of timely payment of the obligations under the rated instrument and are not recommendations to
sanction, renew, disburse, or recall the concerned bank facilities or to buy, sell, or hold any security. These ratings do not convey suitability or price for the investor.
The agency does not constitute an audit on the rated entity. CARE Ratings has based its ratings/outlook based on information obtained from reliable and credible
sources. CARE Ratings does not, however, guarantee the accuracy, adequacy, or completeness of any information and is not responsible for any errors or omissions
and the results obtained from the use of such information. Most entities whose bank facilities/instruments are rated by CARE Ratings have paid a credit rating fee,
based on the amount and type of bank facilities/instruments. CARE Ratings or its subsidiaries/associates may also be involved with other commercial transactions with
the entity. In case of partnership/proprietary concerns, the rating/outlook assigned by CARE Ratings is, inter-alia, based on the capital deployed by the
partners/proprietors and the current financial strength of the firm. The ratings/outlook may change in case of withdrawal of capital, or the unsecured loans brought
in by the partners/proprietors in addition to the financial performance and other relevant factors. CARE Ratings is not responsible for any errors and states that it has
no financial liability whatsoever to the users of the ratings of CARE Ratings. The ratings of CARE Ratings do not factor in any rating-related trigger clauses as per the
terms of the facilities/instruments, which may involve acceleration of payments in case of rating downgrades. However, if any such clauses are introduced and
triggered, the ratings may see volatility and sharp downgrades.

For the detailed Rationale Report and subscription information,

please visit www.careedge.in

5 CARE Ratings Ltd.