IPO-bound Ather Energy's cost of imports from China went up to 28% in FY24

Ather Energy

Electric two-wheeler maker Ather Energy's cost of imports from China went up 28 percent, or around Rs 442 crore, in the financial year 2023-24 even as it sourced the remaining 72 percent of the materials from the domestic market.

In FY23, the total cost of materials consumed through China imports was around 10 percent, or Rs 157.9 crore.

"We sourced our lithium-ion cells, one of the critical components in our E2Ws, from two foreign suppliers located in China and South Korea in the last three fiscal years," the firm said in its draft red herring prospectus filed on September 9.

In FY 2024, the firm’s total cost of materials consumed was Rs 1,579 crore.

The Bengaluru-based EV maker has announced a plan to go public with an initial public offering (IPO), which will include a fresh issue of shares worth Rs 3,100 crore and an offer for sale of up to 2.2 crore shares by investors and promoters.

The filing comes a month after larger rival Ola Electric successfully listed on the bourses.

Ather’s top suppliers in the domestic market are Bharat FIH Limited, Zhengzhou BAK Battery Co Ltd, LG Energy Solutions Ltd, Mahle Electric Drives India Private Limited, Rockman Industries Limited, IPEC India Private Limited, Brembo Brake India Private Limited, Gates Unitta India Company Private Limited, Gabriel India Limited and INDIC EMS Electronics Private Limited.

Also Read: Ather Energy IPO likely to be launched in the first half of 2025; Key details

Indian firms depend on global markets, including China, for battery cells. From mineral processing to cell component manufacturing and cell manufacturing, China dominates the global supply chain. Though it has lesser control over mineral extraction, China dominates processing.

Reserves of lithium, a vital component of EVs, are concentrated in Bolivia, Chile, Argentina and Australia. Cobalt reserves in the Democratic Republic of Congo, copper in Peru, Chile and Australia and Nickel in Indonesia, Brazil, Australia and the Philippines.

Ola Electric, its bigger rival, also saw a significant increase in its cost of imports from China in FY24, even as it bagged financial incentives from the government aimed at promoting local manufacturing of EVs and battery cells.

According to Ola Electric's Red Herring Prospectus (RHP), imports from China rose 37 percent of the company’s total cost of materials consumed in FY24, up from 19 percent in the previous year.

Import dependence from China and South Korea is also one of the key risks for EV manufacturers in India.

While the government is trying to reduce dependence on imports through initiatives like Make in India, Atmanirbhar Campaign, PMP, PLI scheme, Custom Duty elimination and enabling FDI across sectors, it will be some time before OEMs localise.