What The Financials
Inc42 unveils and deciphers all the important financial metrics of Indian startups across industries. Find out revenues, unit economics, profit & loss and all the important financial metrics to judge how the startup will perform in the coming years.
While the auto industry has seen plenty of losses and layoffs in the past year and half, the electric vehicle (EV) market is on the rise in India, and recorded a 20% uptake in sales in FY20. Benefiting from this demand was Bengaluru-based electric scooter startup Ather Energy which has reported INR 48.8 Cr revenue in FY20, representing over 4x growth from INR 11.7 Cr in the previous fiscal year.
The Hero MotoCorp-backed startup recorded over 8x growth in its operating revenue from INR 4.2 Cr in 2019 to INR 35.3 Cr in the year ended March 30, 2020. Out of this, a majority (INR 35 Cr) came from the sale of products — electric two-wheelers — while the rest INR 0.3 Cr was from the sale of services.
But the revenue growth did not deliver profits for Ather, which reported INR 268.6 Cr in expenses in FY20, over twice the INR 119.2 Cr expenses it reported in the previous fiscal year. Consequently, the company’s losses also more than doubled to INR 219.9 Cr from INR 107.5 Cr in FY2019.
The primary reason for the rise in expenses is the increase in production as Ather Energy launched a new electric scooter in January this year, and is also expanding its EV charging network.
Founded by Swapnil Jain and Tarun Mehta in 2013, Ather Energy sells two electric two-wheeler SKUs and operates Ather Grid, a EV charging network in Bengaluru and Chennai with plans to bring this to Ahmedabad, Coimbatore, Hyderabad, Kochi, Kolkata, Mumbai, NCR and Pune.
It has raised nearly $102.2 Mn across multiple rounds from marquee investors like Tiger Global Management, Hero MotoCorp and Flipkart founder Sachin Bansal. According to the company’s regulatory filings, Bansal resigned from Ather Energy’s board last September.
The company last raised INR 84 Cr ($11.2 Mn) from Hero MotoCorp in July 2020, which increased the auto giant’s stake in Ather to 34.58%.
Ather Goes Big On Production, Employee Benefits
Given its focus on expanding the Ather Grid network and the addition of the Ather 450X to its product line, Ather naturally saw expenses skyrocket in FY20. Overall, the expenses have more than doubled from INR 119.2 Cr to INR 268.6 Cr. Much of this spending has gone towards the cost of material used in EV production. Ather spent nearly INR 81 Cr on materials, which has gone up over 2X from INR 38.2 Cr in FY19. It also spent INR 7 Lakh on inventory of finished goods, work-in-progress components and stock-in-trade.
Employee benefits was another area where Ather has seen costs more than double — from INR 25.3 Cr to INR 52.3 Cr in FY20. It spent INR 85.6 Cr in salary and wages, INR 2.7 Cr in provident and other funds and INR 3.1 Cr in staff welfare expense. It is important to note that the company had paid INR 53.3 Cr in salaries and wages in FY19. The company also granted 23,431 shares under the employee stock ownership plan (ESOP).
Further, in FY20, Ather spent INR 87.1 Cr on other expenses which included rent, bills, repairs, subscription membership feeds, legal professional charges and other miscellaneous expenses. Notably, the company had spent INR 12.5 Cr in advertising promotional activities, doubling from INR 6.9 Cr spent in FY19.
Ather Gears Up For Demand, Pan-India Expansion
One of the early entrants in the electric vehicle market in India, Ather launched its first scooters — Ather 450 and Ather 340 — back in 2018. While both products were unique for the Indian market, the company decided to discontinue the entry-level Ather 340 scooter in September 2019 due to low demand. The company wanted to focus more on the more powerful Ather 450 models, which had bigger demand thanks to the price-to-performance ratio.
Updating this model, Ather launched the Ather 450X in January 2020, and claims to have received “decent” pre-bookings so far. The company will start deliveries of the Ather 450X from November pan India. Moreover, it claims to be partnering with companies for innovative revenue models including battery subscription.
In terms of sales, Bengaluru remains the most popular market for Ather. In FY2020, the company managed to sell 3,007 in FY20, of which 2,212 were sold in Bengaluru and 556 in Chennai.
Notably, Ather’s electric scooters sales were almost neck-to-neck with the number of electric cars sold in India in FY20, which was at 3600. Overall, nearly 1.52 Lakh units of EVs were sold in FY20 (including two and three-wheelers) versus 1.26 Lakh sold in the previous year, according to the Society of Manufacturers of Electric Vehicles (SMEV).
A report by US-based Rocky Mountain Institute (RMI) projected that electric two-wheelers and three-wheelers will account for over 80% of all passenger vehicles sold in India by 2030. Ather too has the same growth expectations, and has expanded its production to meet the growing demand. Further, the company is looking to set up another manufacturing unit outside Bengaluru in Tamil Nadu’s Hosur to meet the future demands. It has signed an MoU with the Tamil Nadu government for this unit as well.
Despite the lockdown in the first quarter of FY2021 and a slow Q2, Ather Energy expects the year to be “good” as the demand for electric two-wheeler is expected to be faster. However, it also noted that the recovery is dependent on how quickly the Indian market will recover from the socioeconomic impact of the pandemic, as well as the resumption and normalisation of the supply chain for electric mobility.