Greaves Electric Mobility, the electric vehicle (EV) subsidiary of Greaves Cotton Ltd, has filed a draft red herring prospectus (DRHP) for its initial public offering (IPO). The company aims to raise Rs 1,000 crore (Rs 10 billion) through a fresh issue of shares, while its promoters and investors plan to sell up to 189.4 million shares as part of the offer. The EV manufacturer, which has gained recognition for its electric two- and three-wheelers, intends to utilize the funds raised for expansion and innovation.
Based in Bengaluru, Greaves Electric Mobility operates under the parent company Greaves Cotton Ltd. The company manufactures and sells electric two-wheelers under the Ampere brand and electric as well as internal combustion engine (ICE) three-wheelers under various brands such as Ele, Greaves, and Electra. Competing in the EV market alongside major players like Ola Electric, Ather Energy, TVS Motor, Bajaj Auto, and Hero MotoCorp, Greaves Electric is positioning itself as a key player in the growing EV industry.
According to the DRHP filed with the Securities and Exchange Board of India (SEBI), Greaves Electric will issue equity shares with a face value of Rs 1 each. The shares will be listed on both the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE). The IPO will comprise a fresh issue of shares, along with an offer for sale (OFS). The OFS includes up to 51 million shares to be sold by Greaves Cotton Ltd, the parent company, and up to 138.4 million shares to be sold by investor Abdul Latif Jameel Green Mobility Solutions DMCC.
Greaves Cotton currently holds a 62.5% stake in Greaves Electric, while Abdul Latif Jameel Green Mobility holds the remaining 37.5%. The company plans to use the net proceeds from the fresh issue to fund product research and development, establish in-house battery assembly capabilities, and scale up manufacturing capacity.
In addition to the main IPO, Greaves Electric is considering a pre-IPO placement of up to Rs 200 crore, which could reduce the size of the fresh issue. The decision on the pre-IPO placement will be made before the filing of the Red Herring Prospectus (RHP).
Motilal Oswal Investment Advisors, IIFL Capital, and JM Financial are serving as the lead managers for the Greaves Electric IPO. These financial institutions are responsible for overseeing the IPO process and ensuring its successful execution.
Greaves Electric has three manufacturing facilities located across India. The company operates a facility in Ranipet, Tamil Nadu, for electric two-wheelers, another in Greater Noida, Uttar Pradesh, for electric three-wheelers, and a third in Toopran, Telangana, for both electric and ICE three-wheelers. The company’s extensive dealer network spans across 27 states, with 309 electric two-wheeler dealers and 188 three-wheeler dealers.
For the financial year 2024, Greaves Electric reported a revenue of Rs 611.8 crore, a sharp decline of 45.5% from the previous year. This drop in revenue can be attributed to a significant fall in the sales of electric two-wheelers. Electric two-wheelers make up about 67% of the company's revenue. The company sold only 47,820 units of electric two-wheelers in FY24, down from 1.09 lakh units in FY23. However, the sales of electric three-wheelers doubled to 13,470 units in FY24, compared to 6,870 units in the previous year.
Greaves Electric has yet to achieve profitability. The company's net loss for the financial year 2023-24 increased significantly to Rs 680.6 crore, compared to Rs 19.91 crore in the previous year. The loss was primarily due to an exceptional item of Rs 477.32 crore, which includes Rs 139.98 crore refunded to the government to settle a case related to the FAME 2 scheme and Rs 337.34 crore in subsidy receivables. Greaves Electric was among seven electric two-wheeler manufacturers accused of violating the phased manufacturing program guidelines under the FAME 2 scheme, which resulted in the company returning subsidies with interest.