Bengaluru-based startup Ather Energy is looking for another round of fundraising, after raising Rs 84 crore from Hero MotoCorp, India’s largest two-wheeler manufacturer, through a Series C round, in the last week of July.
The electric scooter maker’s plans for expansion and a new factory are on track for the year. Speaking to Moneycontrol, Tarun Mehta, Chief Executive Officer, Ather Energy, said: “We look forward to raising more funds from investors, including Hero. You should hear something in the next six months.” Mehta declined to share the size of the target fund.
Ather manufactures the 450 and the 450X, both of which are priced above Rs 1 lakh.
Hero now controls nearly 39 percent of Ather after the latest funding round, up from the earlier 35 percent. The latest transaction values Ather Energy around Rs 2,100 crore. In FY20, Ather clocked revenues of Rs 35.3 crore, an eight-fold increase, compared to Rs 4.2 crore in FY19.
“Hero increasing stake in Ather is a sign of their increasing confidence in us. Though Hero has a substantial stake in Ather, we have a vision that is distinct from Hero Motocorp. Since December 2016, they have participated in all the fundraising we have done and I expect them to continue to support us,” added Mehta.
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Ather wants to position itself as a premium brand, whereas Hero Motocorp is known for its mass market image.
Market expansion
Centred in Bengaluru, Ather entered the Chennai market a few months ago. Next would be Hyderabad, followed by Pune, Mumbai and the NCR. About 10-11 cities are to be added in FY21.
Owing to the disruption caused by COVID-19, there has been a delay in entering new markets by a few months. By August, Ather should have added four more cities but its newly appointed dealer partners were not able to start because of the lockdown.
“There was concern that because of COVID, we would have deferred things by a lot, but luckily all we are seeing is only a 3-4 month delay. We are sticking to the 10-city expansion for this financial year,” Mehta added.
New factory
Despite the steep pricing and the general sluggishness in demand for new vehicles, Mehta is going ahead with the planned factory in Tamil Nadu.
“The factory should be up before the year ends. We are hoping to start production from the new plant from December itself,” added Mehta.
The greenfield plant will have an initial output capacity of 5,000 a month. This would be scaled up to 100,000 per year in Phase 1 in 12-18 months. The plant's eventual capacity would be 500,000 units a year over multiple years. Ather’s current manufacturing capacity is 35,000-40,000 units a year.
India’s electric two-wheeler market has seen a nearly three-fold growth in volumes as of FY20. From 54,800 units in FY18, sales of electric two-wheelers stood at 152,000 units in FY20, as per data shared by the Society of Manufacturers of Electric Vehicles, the apex lobby body of electric-vehicle makers.
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