Ratan Tata exits Ampere Vehicles, earns 2 times on investment

Ratan Tata

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Former Tata Sons Chairman Ratan Tata, and now an astute investor, is believed to have earned more than twice his investment in a Coimbatore-based electric vehicle start-up.

The Chairman of Tata Trusts sold his entire equity holding in Ampere Vehicles last week to Mumbai-based small engine manufacturer Greaves Cotton. Former Infosys Executive Vice-Chairman Kris Gopalakrishnan also exited Ampere simultaneously.

Tata had invested about Rs 3 crore in Ampere in his personal capacity in mid-2015. This was also the first investment by him in an automobile company.

“Tata sold his stake in Ampere, earning more than two times. Most investors made similar returns. Kris (Gopalakrishnan) came into the company later, so his returns could have been lower than Tata’s,” a source said.

BSE-listed Greaves Cotton said it will acquire 67 percent in Ampere for Rs 77 crore, valuing the firm at Rs 115 crore. It has promised to buy a further 13 percent in Ampere for Rs 75.5 crore. Almost the entire management of Ampere has been retained by Greaves.

“Ratan Tata does not comment on his personal investments. Therefore, we cannot offer you any guidance whatsoever,” said a spokesperson of Tata Trusts.

Ampere will become a subsidiary of the profit-making Greaves Cotton. The latter has been independently working on electric vehicle technology. With this buyout, Ampere hopes to accelerate product and new technology development process.

“Ampere will strengthen its two-wheeler play with products that will have better range and power. However, the idea would be to reduce the acquisition cost of the vehicle by way of technology innovation,” the source added.

At present, Ampere manufactures one electric scooter, an electric bicycle and a load carrying three-wheeler that are mostly powered by old generation lead acid batteries.

The company is keen on developing a range of medium powered scooters that can run for more than 100 km on a full charge (from 50 km at present), but priced at more affordable levels.

Electric vehicle prices have not gone down as expected earlier because of a slowdown in the price of batteries. While range anxiety among consumers remains the top concern, the higher acquisition cost is also a major deterrent for buyers.

For instance, a lithium-ion battery powered scooter offering 100 km on a full charge is priced on par with the Honda Activa, the largest selling scooter in India. The Activa can run for 250-300 km on a full tank.

“The reduction is battery prices is happening, but the pace has certainly slowed down compared to earlier years. This is because many companies around the world have jumped on the EV bandwagon,” the source added.