Epsilon’s US entry to be part-funded by local auto firms: MD

livemint.com:

NEW DELHI : Epsilon Advanced Materials (EAM), a battery material firm based in Mumbai, is planning to enter the US market with financial support from the car manufacturers it will be supplying its products to, said Vikram Handa, managing director, EAM. The company is also looking for a strategic partner and may look at tapping the equity market after 2025, he added. Elaborating on its strategy to fund a large capital expenditure plans, Handa said a firm like Epsilon enter long-term contracts with key automobile manufacturers, who fund the capex plan.

“If you look downstream, you will have electrification of cars, you have companies investing in gigafactories, you will have a company like Epsilon investing in material processing. It is a unique industry because everything is developing together... and all these industries are heavy on capex...

So, you get into eight-year contracts at most and it is like an agreement, where you specifically build a factory for them," Handa said. “So, even in the US, where I am building the plant, we have committed to 2-3 customers... We are making specifically for them, so as we start building this facility the customers will be committing to partly fund the proposed investment in the project," Handa said.

However, he did not share the details on how much the US-based automakers will be contributing. Typically, customers ensures almost half of the total funding, he added. The remaining funding is through debt, which is easy to get since a business plan is in place, and the customers have committed to source from us for the next eight years, Handa said.