Ather Energy's net loss has jumped by 151.2 per cent year-on-year to Rs 864.5 crore in 2022-23 (FY23) as the electric two-wheeler maker continues to focus on expanding volumes and market share.
The company's total revenue has increased by 336.6 per cent year-on-year to Rs 1,783.6 crore in FY23, according to Hero MotoCorp's annual reports. Hero MotoCorp, India's largest two-wheeler maker, owns about 37 per cent in Ather Energy.
Ather Energy did not respond to queries sent by Business Standard on this matter. However, a company executive stated that Ather is focused on expanding its sales right now and it will achieve profitability in "mid-to-long term".
The company is not expecting to achieve profitability this year due to the recent changes made by the government in the subsidy regime. From June onwards, the Ministry of Heavy Industries (MHI) has slashed the FAME-II subsidy of electric two-wheelers to Rs 10,000 per Kwh from the earlier Rs 15,000 per Kwh. Apart from reducing the per Kwh incentive by Rs 5,000, the ministry also reduced the maximum subsidy cap to 15 per cent of the vehicle's ex-factory price from 40 per cent before.
These changes have pushed up the prices of EVs. The sales of Ather, as well as other EV makers, have been affected due to this subsidy cut. Ather sold 7,800 units and 15,418 units in April and May, respectively, according to Vahan registration data. In June and July, its monthly sales dropped to 4,596 units and 6,671 units in June and July, respectively, due to the subsidy cut. In FY22, the company's average monthly sales stood at 7,042 units.
Hero MotoCorp in its annual report for FY23 stated that Ather Energy has received a show cause notice dated March 29, 2023, from IFCI Limited on behalf of the MHI seeking reply in relation to certain matters under the FAME-II subsidy and phased manufacturing programme guidelines. "Ather Energy Private Limited has submitted a detailed response to the Automobile Research Association of India (ARAI) dated April 12, 2023," Hero stated.
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ARAI works under the MHI. The show cause notice has been issued to those companies which allegedly violated the subsidy guidelines that make it mandatory for them to use a specific percentage of local components in their vehicles.
"Ather Energy is under discussion with the MHI and ARAI and believes that the submitted response adequately addresses the contentions raised in the show cause notice. Ather Energy does not expect any significant penalties, fines, or demands arising out of the above. The above matter is subject to legal proceedings in the ordinary course of business," it mentioned.
The legal proceeding, when ultimately concluded, will not, in the opinion of management, have a material effect on the result of operations or the financial position of the Hero MotoCorp Group, it added.
The electric two-wheeler sales in India jumped by 188 per cent year-on-year to 726,748 units in FY23, according to Federation of Automobile Dealers Associations (FADA) data. Ather's market share in FY23 stood at about 11 per cent, making it the sixth-largest e-scooter maker in the country, as per the FADA data.
Ather Energy founder and chief executive officer had earlier this month told Business Standard that the company's main aim is to make a profit in the next two years. "We do not burn cash in selling our e-scooters but make gross margins, which is a lesson we learnt during the pandemic. That is why we are going through the process of raising funds for growth and not burning cash," he had stated.