The company, which makes Ampere electric two-wheelers, targets to use Rs 375.3 crore from the IPO proceeds for product and technology development and enhancing capabilities at its technology center in Bengaluru.
24 Dec 2024 | 7030 Views | By Kiran Murali
Electric vehicle maker Greaves Electric Mobility has filed a draft red herring prospectus (DRHP) for its initial public offering (IPO). The company plans to raise Rs 1,000 crore (Rs 10 billion) through a fresh issue of shares, while its promoter and investor eye to sell up to 189.4 million shares.
This is an Autocar Pro Plus article. Subscribe to continue reading.
Electric vehicle maker Greaves Electric Mobility has filed a draft red herring prospectus (DRHP) for its initial public offering (IPO). The company plans to raise Rs 1,000 crore (Rs 10 billion) through a fresh issue of shares, while its promoter and investor eye to sell up to 189.4 million shares.
Bengaluru-based Greaves Electric is the electric mobility arm of Greaves Cotton Ltd. It manufactures and sells electric two-wheelers under the Ampere brand, and electric as well as ICE three-wheelers under Ele, Greaves and Electra brands.
The company competes with major players such as Ola Electric, Ather Energy, TVS Motor, Bajaj Auto and Hero MotoCorp.
According to the DRHP filed with the market regulator SEBI, the company will issue equity shares of Rs 1 face value and list them on both the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE).
The offer of sales component includes up to 51 million shares by Greaves Cotton Ltd (parent company) and up to 138.4 million shares by investor Abdul Latif Jameel Green Mobility Solutions DMCC.
Currently, Greaves Cotton holds a 62.5% stake in Greaves Electric. Abdul Latif Jameel Green Mobility holds the remaining stake.
The company noted that it might consider a pre-IPO placement of up to Rs 200 crore before the filing of the Red Herring Prospectus. If the pre-IPO placement is undertaken the fresh issue will be reduced.
Greaves Electric intends to use the net proceeds of the fresh issue for product research and development, build in-house battery assembly capabilities, and boost manufacturing capacity.
Greaves Electric has three manufacturing facilities – Ranipet in Tamil Nadu for electric two-wheelers, Greater Noida in Uttar Pradesh for electric three-wheelers, and Toopran in Telangana for electric and ICE three-wheelers.
The company has a presence in 27 states with 309 electric two-wheeler and 188 three-wheeler dealers.
Around Rs 375 crore from the proceeds will be used for product and technology development, and enhancing capabilities at its technology center in Bengaluru.
Almost Rs 83 crore will be used to set up an in-house battery pack assembly line at its Ranipet plant in Tamil Nadu by the financial year 2027.
Currently, the automaker purchases assembled battery packs from external suppliers. It has identified 13 suppliers across South-East Asia, China and India for the supply of cells to assemble the battery pack.
The company will also use Rs 74 crore from the funds raised to increase its stake in subsidiary MLR Auto Ltd, which operates the Toopran facility.
The company now holds a 51% stake in MLR Auto and plans to fully acquire it through the exercise of a call option. Greaves Electric's acquisition of MLR Auto in 2021 helped it enter the L5-three-wheeler segment.
The automaker is more than doubling the manufacturing capacity at both Toopran and Greater Noida plants in a bid to increase the three-wheeler output. Ranipet plant can produce 4.80 lakh electric two-wheelers in a year.
Annual capacity at Toopran will be increased to 34,800 units from 13,538 units with Rs 38 crore while Greater Noida's capacity will be expanded to 45,896 from 21,514 units with Rs 20 crore.
Greaves Electric’s revenue from operations during 2023-24 came in at Rs 611.8 crore, down 45.5% from the year-ago period. The decline in revenue reflects a significant drop in the sales of electric two-wheelers during the year.
Electric two-wheelers account for around 67% of the top line. Sales volume of electric two-wheelers fell to 47,820 units from 1.09 lakh units sold in the financial year 2023, while three-wheeler sales doubled to 13,470 units from 6,870 units.
Greaves Electric is yet to report a net profit. In 2023-24, the company's net loss widened significantly to Rs 680.6 crore from Rs 19.91 crore. This is largely because of an exceptional item of Rs 477.32 crore recorded as a loss arising from Rs 139.98 crore refunded to the government in 2023 to settle the FAME 2 misappropriation case and subsidy receivables of Rs 337.34 crore.
Greaves Electric was among the seven electric two-wheelers (e2W) makers accused by the government of selling vehicles and claiming subsidies while violating the phased manufacturing program guidelines under the FAME 2 scheme. The companies were asked to return the subsidies claimed along with interest.