Ather Energy Ltd

Strategic expansion of our product portfolio through our multi-product technology platforms.

Expand and deepen our distribution network in India and beyond.

Improving operational efficiency and manufacturing capabilities through the establishment of our Factory 3.0.

Continue our focus on unit economics.

Securing our cell supply chain through long-term partnerships.

Continue to build the
ther` brand.

Pursue Selective Strategic Partnerships and Acquisitions.

Our ability to pioneer new technologies.

Our E2Ws are positioned at a premium price in their respective segments in the E2W market.

Vertically integrated approach to product design with strong in-house R&D capabilities.

Software defined ecosystem that drives high customer engagement and drives margins.

Established and scalable technology platform enabling accelerated product launches.

Experienced management team and long-term investors committed to strong corporate governance standards.

Other than the batteries that its manufacture in-house, the company relies on its suppliers to provide all other EV components used in assembling its E2Ws in-house. Any loss of key suppliers, or any failures or refusal by them to supply such components to it could cause business disruptions.

The company has received some customer complaints pertaining to its products in the past. There is no assurance that the company will not receive similar complaints in the future or that its will be able to address such customer complaints in a timely manner or at all.

The company has incurred losses since incorporation. The company had stagnant revenue growth in Fiscal Year 2024 and loss before tax of Rs. 5,779 million and Rs. 10,597 million in the nine months ended December 31, 2024 and Fiscal Year 2024, respectively. There is no assurance that the company will be cost effective in its operations or achieve profitability in the future.

The company has incurred negative cash flows from operations continuously since incorporation. The company had net cash used in operating activities of Rs. 7,171 million and Rs. 2,676 million in the nine months ended December 31, 2024 and Fiscal Year 2024, respectively. Negative cash flows may adversely impact its liquidity and prospects.

Its limited operating history makes evaluating the company business and future prospects difficult and its historical performance may not be indicative of future performance.

Its future growth is dependent on the demand for and adoption of electric two-wheelers. According to the CRISIL Report, the company had a 10.7% and 11.5% market share of the Indian E2W market in the nine months ended December 31, 2024 and Fiscal Year 2024, respectively. If the market does not develop as the company expect, or develops at a speed that is slower than anticipated, its business, prospects, financial condition and operating results will be affected.

The lithium-ion cells used in its electric two-wheelers` battery packs could catch on fire or vent smoke even if properly manufactured, managed or controlled. Such instances could subject it to adverse publicity, which may impact the company brand, business, prospects, financial condition and results of operations.

Any disruptions in the availability and any changes in the pricing and quality of lithium-ion cells could cause significant disruptions to and adversely impact its business operations.

The company relies on imports from certain countries, such as China, and supplies of such imports may be disrupted by changes in government regulations or policies, deterioration in economic conditions or escalation of trade tensions.

There are outstanding legal proceedings against the Company, certain of its Promoters and the company Directors. Any adverse decision in such proceedings may render it/them liable to liabilities/penalties and may adversely affect its business, cash flows and reputation.

Failures to attract customers could adversely affect the company results of operations, financial condition, profitability and prospects.

Its market share of the Indian E2W market was relatively stagnant at 10.7% and 11.5% in the nine months ended December 31, 2024 and Fiscal Year 2024, respectively.

Its statutory auditors have identified certain emphasis of matters in their auditor reports.

Rs.7,500 million of the Net Proceeds are intended to be utilised for investment into its research and development requirements, which constitutes a significant portion of the Net Proceeds proposed to be raised from the Offer. There is no assurance that such investment will proceed as planned and nor can the company guarantee that it will result in the creation of tangible assets or otherwise achieve results or outcomes as anticipated.

The company sales are geographically concentrated in South India, exposing its to additional risks of business disruptions arising from natural disasters, regional unrest and regulatory changes in South India.

The company or may be subject to risks associated with strategic alliances or acquisitions.

Its may not be able to sustain historical revenue growth rates and the company historical performance may not be indicative of its future growth or financial results.

As the company operates in the competitive Indian automobile market, its may face downward pricing pressures that may require the company to reduce the price of its electric two-wheelers. A reduction in the price of its electric two-wheelers will reduce profitability, which will adversely affect its business, prospects and results of operations.

The company had Rs. 608 million of contingent liabilities as of December 31, 2024, which represented 56% of its net worth, and capital commitments of Rs. 508 million, which represented 47% of its net worth, as at such date. The company had litigation amounting to Rs. 1,161.98 million, which represented 108% of its net worth, as of the date of this Red Herring Prospectus, a portion of which is disclosed as contingent liability. If its contingent liabilities materialise, it may affect the company results of operations, financial condition and cash flows.

There have been certain instances of delays in payment of statutory dues in the past. Any delay in payment of statutory dues in future, may result in the imposition of penalties and in turn may have an adverse effect on its business, financial condition, results of operation and cash flows.

Its competitiveness within the highly competitive Indian automotive market depends on the company ability to design, develop, manufacture, market and deliver new and quality electric two-wheeler models and products and launch new associated services. There is no assurance that the company will be able to successfully compete in the markets the company currently operate in or those that its plan to expand into, compete with new or existing players, or maintain or grow its market share, which may affect the company business, operations and financial condition.

Its products may not be sold at favourable margins and failures to manage the company costs may adversely affect its margin, results of operations and ability to achieve profitability. The company had Adjusted Gross Margin of 19% and 9% in the nine months ended December 31, 2024 and Fiscal Year 2024, respectively.

Its may not be able to sustain historical customer growth rates, which could adversely affect its results of operations, financial condition, profitability and prospects.

The company electric two-wheelers, software, charging infrastructure, accessories or the components used in the manufacture of its electric two-wheelers may be defective or have quality issues, and may fail to meet industry standards or advertised performance levels.

If the company electric two-wheelers does not meet the promised level of performance and quality, its may be required to undertake product recalls or other corrective actions.

The company currently derives its revenue predominantly from the sale of limited electric two-wheeler models. If the company electric two-wheelers are not well-received by the market, its business and future prospects could be adversely impacted.

Revenue from software sales was Rs. 897 million and Rs. 1,074 million in the nine months ended December 31, 2024 and Fiscal Year 2024, respectively. A reduction in software sales, including sales attributable to repurchases by existing customers who previously purchased its software, may adversely impact the company results of operations, prospects and cash flows.

The retail prices of its electric two-wheelers are susceptible to a reduction or elimination of government incentives or the ineligibility of its electric two-wheelers for such incentives, such as the Production-linked Incentives Scheme which the company is not eligible for. The increase in retail price could affect customer demand and in turn, adversely impact its business and prospects.

If its electric two-wheelers become ineligible for the PM Electric Drive Revolution in Innovative Vehicle Enhancement scheme, or such incentives are reduced or eliminated, the retail price of its electric two-wheelers could increase and demand for the company products may decline.

If the company suppliers fails to deliver components used in its electric two-wheelers in accordance with agreed volumes and schedules or increase their prices, its may faces delays in the company manufacturing and delivery timelines or be required to increase the retail price of its electric two-wheelers.

If the company retail partners or authorised distributors operating the other` branded experience centres and service centres fails to provide satisfactory customer service, or the company fails to retain or attract retail partners, its business, prospects, financial condition, results of operations and cash flows could be adversely affected.

The company currently depends on its Hosur Factory for the assembly and manufacturing of the company electric twowheelers and battery packs, and any disruptions to the operations of its Hosur Factory could materially adversely affect the company business, financial condition and results of operations.

Its business and prospects depends significantly on the company ability to build its "Other` brand. Its may not succeed in continuing to develop and strengthen the "Other` brand, and its reputation, brand and sales could be harmed by complaints and negative publicity regarding the Company or products.

An excess or shortage in its inventory of electric two-wheelers and components could result in additional costs or production delays and limit its ability to leverage economies of scale.

In the nine months ended December 31, 2024, its Hosur Factory had a capacity utilisation rate of 39% and 41%, for the company electric two-wheeler assembly and battery pack manufacturing lines, respectively. Low capacity utilisation rates of its Hosur Factory may limit the company ability to leverage economies of scale.

The company recorded exceptional items amounting to Rs. 1,746 million in Fiscal Year 2024 in relation to refunds issued to its customers for the chargers purchased by customers as an accessory to their E2W prior to April 12, 2023, and adjustments of incentives for differential battery capacity.

The company is highly dependent on the services of Tarun Sanjay Mehta and Swapnil Babanlal Jain, Key Managerial Personnel, Senior Management and other qualified personnel, and its may experience disruptions to the company business if its lose their services.

The company requires a significant amount of capital and its future capital needs may requires the company to obtain additional loans and borrowings or issue equity or debt securities, which may impose restrictions on its business activities and dilute the company shareholders` equity.

Its research and development efforts may not yield expected results and the company may not recoup its investments, which could adversely affect the company financial condition, results of operations and prospects.

Its may experience delays, disruptions or cost overruns in the construction of the Factory 3.0 at Chhatrapati Sambhajinagar (formerly Aurangabad), Maharashtra, India, which could adversely affect its business, prospects, financial condition and results of operation.

Any failures of its products or technology systems, breaches in data security or privacy concerns, and any failures on its part to address such issues, could harm the company reputation and growth prospects, and cause it to incur substantial costs to remedy such issues.

The driving range of its electric two-wheelers on a single battery charge decreases over time and this may negatively impact customers` decision to adopt electric vehicles. The company may not be able to fully ascertain the deterioration rate of its battery packs.

The wider distribution networks of certain of its competitors may provide them with a competitive edge, and the company may faces higher barriers to entry in certain markets which its competitors have penetrated.

Any insufficiency of its warranty reserves to cover future warranty claims could have an adverse impact on its financials.

The automotive industry and its technology are rapidly evolving and may be subject to unforeseen changes which could adversely affect the demand for its electric two-wheelers or increase the company operating costs.

Its may faces challenges in the provision of charging solutions to customers, and inadequate access to its charging infrastructure could materially and adversely affect demand for its electric twowheelers.

If the company customers alter or customise its electric two-wheelers with aftermarket parts or severely damage the company electric two-wheelers, such electric two-wheelers may not operate properly and impact its reputation.

Failures to comply or a delay in complying with motor vehicle standards laid down by the Automotive Research Association of India could materially and adversely affect its business and results of operations.

Rs.9,272 million of the Net Proceeds are intended to be utilised for funding its capital expenditure requirements to construct Phase 1 of Factory 3.0 at Chhatrapati Sambhajinagar (formerly Aurangabad), Maharashtra. The company has relied on third-parties` quotations in estimating the total cost of its capital expenditure and no bank, financial institution or other independent agency have appraised this project.

The functioning of its electric two-wheelers is highly dependent on the health and functioning of key components, such as its battery packs. If customers perceive the cost of replacing these components in the company electric two-wheelers to be high, they may choose not to purchase its electric two-wheelers.

Compared to internal combustion engine two-wheelers, the network of service centres for electric twowheelers have a much restricted geographical spread, which may deter customers from purchasing its electric two-wheelers.

Its may not be able to prevent others from unauthorised use of the company intellectual property and may in the future become subject to patent, trademark and/or other intellectual property infringement claims.

Its business may be adversely affected by the company failures to obtain, renew, or maintain the statutory and regulatory permits and approvals required.

The company is subject to various environmental, health and safety laws and regulations and failure to comply with such laws and regulations could subject it to fines, penalties, suspensions or revocations of its permits and other consequences.

The company use of open source software in its applications can subject its proprietary software to general release and subject the company to litigation, claims or proceedings.

Failures to renew its leases or service agreements, or secure new leases for the company manufacturing facilities, experience centres, research and development facilities and Registered, Corporate and zonal offices could cause business disruptions.

If the company is unable to comply with repayment and other covenants in its financing agreements, the company business, financial condition and cash flows could be adversely affected.

The Ather Grid may not be interoperable with other electric vehicle players` charging infrastructure, and this may deter potential customers from purchasing its electric two-wheelers.

The power used to charge its electric two-wheeler battery packs are partly generated by nonrenewable sources and the use of these may not be environmentally sustainable.

The manufacturing of its electric two-wheelers and later discharge of the company battery packs are associated with environmental hazards, especially given that its lithium-ion cells are not designed to be repaired or reused.

There may be challenges in setting up and conducting operations of Factory 3.0 in Chhatrapati Sambhajinagar, owing to unfamiliar geographical considerations for it, lack of developed ecosystem of EV players and uncertainty in respect of continued supplies, which may lead to delays or disruptions in its construction and affect its operation.

Customers may face difficulties charging their electric two-wheelers, particularly during long distance travels, as a result of inadequate access to public charging infrastructure. This in turn, could materially and adversely affect demand for its electric two-wheelers.

The company collect and process significant information about its customers and their vehicles and are subject to various laws, regulations, rules, policies and other obligations regarding cybersecurity, privacy, data protection and information security, and failures to comply with them, or any loss, unauthorised access or data leakage could subject it to significant reputational, financial, legal and operational consequences.

The company has engaged in, and may continue to engage in, related party transactions, which could give rise to conflicts of interest.

Its insurance policies may not be sufficient to protect it from all business risks, and if its insurance coverage is inadequate, it may have an adverse effect on its business, financial condition and results of operations.

Management judgement is used when ascertaining its funding requirements and the proposed deployment of Net Proceeds. The company has not entered into any definitive arrangements to utilise certain portions of the Net Proceeds of the Offer.

There may be injuries sustained by people or damage to property within its manufacturing and research and development facilities.

The company has used information from the CRISIL Report which its commissioned and paid for exclusively in relation to the Offer and any reliance on information therein is subject to inherent risks.

Its limited operating history makes it difficult for the company to judge the exact nature and effect of seasonality on its business.

Certain of its Promoters, Directors, Key Managerial Personnel and Senior Management have interests in the Company in addition to their remuneration and reimbursement of expenses.

The company track certain operational metrics and non-GAAP (generally accepted accounting principles) measures for its operations with internal systems and tools and does not independently verify such metrics. Certain of its operational metrics are subject to inherent challenges in measurement and any real or perceived inaccuracies in such metrics may adversely affect its business and reputation.

Its business may be adversely affected by labour unrest and union activities and any disputes with the company workforce may disrupt its business operations.

Its international operations and business expansions abroad may subject the company to unfavourable regulatory, political, currency, tax, and labour conditions, which could harm its business, prospects, financial condition, results of operations, and cash flows.

The company is subject to risks associated with exchange rate fluctuations, which can adversely affect its net profit, finance costs and margins.

Its may not be able to pay dividends in the future.

The company has not been able to obtain records of all the prior work experience of certain of its Directors to supplement their past work experience. Accordingly, limited disclosure has been made for their profiles in this Red Herring Prospectus.

There are certain outstanding legal proceedings against its Corporate Promoter, Hero MotoCorp Limited.