1 week ago
Electric two-wheeler maker Ather Energy has submitted preliminary papers with the Securities and Exchange Board of India (Sebi) to raise funds through an initial public offering (IPO). According to the Draft Red Herring Prospectus (DRHP), the IPO will consist of a fresh issue of equity shares valued at Rs 3,100 crore alongside an Offer For Sale (OFS) of 22 million equity shares by its promoters and investor shareholders.
Ather said it will use the funds raised from the proceeds of the IPO to establish an electric two-wheeler factory in India's Maharashtra state.
The 3.0 factory in Chhatrapati Sambhajinagar (formerly Aurangabad), Maharashtra, will be constructed on a 95-year leased property, with a total production capacity of 1 million electric two-wheelers (E2Ws) annually upon completion of both phases. The first phase, funded through IPO proceeds, is expected to be completed by March 2027 with a capacity of 0.5 million E2Ws. However, the company states it could face potential delays, cost overruns, and disruptions due to factors like weak market demand, labour issues, technological changes, and regulatory hurdles. The company also stated the need for compliance with numerous government approvals, as failure to meet these deadlines or regulatory requirements could result in fines, penalties, or the loss of the lease.
Part of the IPO proceeds will also be used for research and development (R&D), marketing initiatives, infrastructure, production initiatives, and other general corporate purposes.
The company's loss widened for at least the second year in a row in FY24 to Rs 1,060 crore from Rs 864 crore a year earlier, as per the DRHP.
Ather is the second electric two-wheeler company looking to go public after Ola Electric Mobility floated its Rs 6,145 crore IPO in August. Ola Electric Mobility shares jumped 20 per cent on their trading debut to hit the upper circuit. Ola, the largest E2W seller in India by number of units, accounted for 35 per cent of the total E2W registrations in FY24. It is seen as having a head start over its competition if the market shifts towards electric vehicles, labelled as the future of mobility.
According to Redseer, E2W penetration in India is expected to expand from 5.4 per cent of domestic two-wheeler registrations in FY24 to 41-56 per cent of domestic two-wheeler sales volume by FY28. The Indian E2W industry is expected to grow at a compound annual growth rate (CAGR) of 11 per cent to reach a size of $35 billion (Rs 2.8 trillion) to $45 billion (Rs 3.6 trillion) in FY28, the consultancy firm predicts.
While Ather is gearing up for its public debut, it has also highlighted potential cybersecurity risks associated with its electric two-wheelers (E2Ws) and internal networks. In its DRHP, Ather Energy acknowledged the possibility of unauthorised access to its systems, which could lead to significant consequences. Although the company claims it has implemented robust security measures and has not experienced significant cybersecurity breaches in the past, it cautioned that future attempts by hackers could target their networks, E2Ws, and data systems.
Despite having cybersecurity insurance, Ather emphasised that coverage might not be comprehensive enough to protect against all potential losses.
Ola's DRHP also highlighted the company's reliance on various insurance policies to cover risks such as cybersecurity, terrorism, fire, accidents, and business interruptions. While Ola maintains insurance that it believes is typical for its industry and covers a significant percentage of its assets (ranging from 89.73 to 98.26 per cent in recent years), the company acknowledges that the coverage may not be adequate for all potential losses or liabilities. The policies contain exclusions and limitations, and there are risks that are either uninsurable or not covered on commercially acceptable terms.
Ola Electric was roughly valued at $4 bn and according to a reuters report Ather Energy has been valued at $2.5 bn.
