Leaving behind Okinawa, Ampere, and Ather Energy, Hero Electric has ascended to the top position in the electric vehicle ecosystem in terms of revenues during FY22. Okinawa, Ampere, and Ather posted Rs 822 crore, Rs 522 crore, and Rs 408 crore topline respectively while Hero Electric generated Rs 841 crore from its operations in FY22.
Hero Electric’s operating income surged 2.8X to Rs 841 crore in the last fiscal year compared to Rs 303 crore in FY21, as per its annual financial statement with the Registrar of Companies (RoC).
Hero Electric manufactures and sells electric two-wheeler scooters and its collection from the same grew 2.8X to Rs 840 crore in FY22 from Rs 302 crore in FY21. The firm also made Rs 94 lakh from the sale of scrap whereas Rs 11.39 crore came via interest and gain on current investments and other non-operating income which took its total revenues to Rs 852 crore.
Cost of procurement of stock in trade was the largest cost element which formed over 80% of the total expenditure and jumped nearly 3X to Rs 717 crore during FY22. With growth accelerating, the company hired more resources and this led to a 2.2X surge in its employee benefits expenses. This cost stood at Rs 43.42 crore in the fiscal year ending March 2022.
Freight and logistics costs ballooned 2.1X to Rs 27 crore in FY22 from Rs 13 crore in FY21 while promotional and legal expenses shot up 2.4X and 3.7X respectively to Rs 21 crore and Rs 19 crore during the last fiscal year. Hero Electric also spent Rs 16.7 crore on warranty claims which took its total expenditure up by 2.7X to Rs 893 crore during FY22.
Thus, even with the two-fold jump in expenses, its losses increased only 43% to Rs 30 crore in FY22 as compared to Rs 21 crore in the preceding fiscal year. Its cash outflows from operations went negative to Rs 261 crore which could be attributed to nearly 3X jump in the cost of goods sold.
As per Fintrackr’s analysis, the company’s EBITDA margin and ROCE improved by 66 and 49 BPS to -2.34% and -7.53% respectively during FY22. On a unit level, Hero Electric spent Rs 1.06 to earn a rupee of operating revenue during the same period.
During FY22, Hero Electric sold 65,303 units and stood at the first position. Okinawa, Ampere, Ather, Pur Energy, and Ola Electric were next on the list. Competition in FY23 is expected to be much stiffer, thanks to Ola Electric entering the fray too. As on 25 Dec, 2022, Ola Electric is leading the list with sales of 1,05,021 units of two-wheelers followed by Okinawa with 100,547 units. Hero Electric has sold around 97,726 units and stood at 3rd position followed by Ampere and Ather with 80,282 units and 49,916 units sold to date, as per the data on Vahan portal.
Unlike the four-wheeler market for electric vehicles, where the biggest players have barely entered (Maruti Suzuki and Hyundai), FY23 and FY24 especially will see the top 3 players enter in a big way, after testing the market with some early launches. Hero Motocorp is already making a huge push with its Vida launch blitzkrieg, even as TVS Motors and Bajaj Auto fine tune larger launches and pitches. That will change market dynamics in many ways, not least of which will be pressure on margins. While too early to call it consolidation time among the top 7-8, the fact remains that post FY23, this segment of the electric vehicle industry will see some big moves to ensure the sustainability of balance sheets.
Update: The story has been updated to include Ampere’s revenue numbers for FY22.