Altigreen shifts focus on profitability after restructuring efforts
After a year-long struggle to secure funds during a restructuring process, Reliance-backed electric threewheeler manufacturer, Altigreen, is now shifting gears to prioritise profitability: a key metric for investors. However, its path to profitability appears challenging and uncertain.
Despite drastic restructuring efforts in December, which involved laying off around 200 employees and slashing salaries by 30-40%, electric threewheeler sales remain a challenge for Altigreen, two people familiar with the firm’s operations said, seeking anonymity.
Besides in FY23, Altigreen’s losses widened from ₹22 crore a year ago to ₹78 crore, according to the latest data sourced from Tofler. Amitabh Saran, co-founder and chief executive, however, insisted that the cost-cutting measures have started bearing fruit. “Investors in 2024 have been evaluating business plans on the basis of a clear path to profitability of companies.”
“Altigreen’s move in September, to focus on profitability (instead of market share), is reaping dividends,” he added.
Altigreen has so far secured $39 million (about ₹300 crore) from the likes of Reliance New Energy, Sixth Sense Ventures, Xponentia Capital Partners, Momentum Venture Capital, and Accurant International.
Altigreen has been witnessing significant challenges to sell its products due to muted demand, the people said.
“In mid-2023, it was expecting a funding round and all the teams were asked what resources were needed for manufacturing 1,000 vehicles. But, it is struggling with demand, and no orders coming, so we were manufacturing only 100-200 scooters a month,” said one of the two people, a former company executive.
Altigreen sold 146 vehicles in 2021, 861 in 2022, and 2,519 in 2023, according to Vahan data. To put things in perspective, its 300,000-sq.ft manufacturing and warehouse facility at Malur in Karnataka has an annual capacity to produce 55,000 three-wheeled cargo vehicles, according to information on its website.
The Indian e-three-wheeler market reached $1,031 million in 2023, according to research platform IMARC group.
Altigreen’s increasing revenue to ₹95 crore in FY23 from ₹8 crore a year ago, as well as improving margins following the restructuring is expected to drive profits, Saran said.“We started this year with negative
(-3%) margin and have steadily moved to positive (+16%) margin. Our efforts continue as we aim to reach (+29%) margin by 2025,” he added.
However, he did not reveal the number of employees who were laid off or the quantum of pay cuts following the restructuring. “Changes in the team are continuous, gradual, and with a determination to reach a stronger, long-term sustainable position,” Saran said in an emailed response.
“The automobile industry is unlike the technology or software world, where investors’ capital can be burnt for shortterm market share gains, while the company seeks valuation multipliers,” he said. “Burning investor capital is not the way I run my company. Given FAME subsidy continuation uncertainties, the company began to focus on profitability and building margins for the ‘no subsidy’ days, which is coming sooner than we think.”
It is focussing on new product launches, stronger supplier partnerships and alliances with battery manufacturers, charging infrastructure providers, and vehicle financing providers, Saran said.
Altigreen recently launched two models, including an electric three-wheeler for passengers. Currently, it sells seven models of e-three-wheelers.
The company’s difficulty in raising funds coincides with an industry slowdown, fuelled by investor caution amid external headwinds,saidpeoplefamiliar with the matter.
In May last year, Bloomberg had reported that the EV manufacturer was looking to raise $85 million to ramp up its production. Saran had then confirmed that it was looking to close the round by July.
However, the uncertainties around factors such as FAME, or Faster Adoption and Manufacturing of Electric Vehicles subsidy, unfavourable pricing of cells, and delays in government decisions on scrapping the mandatory testing parameters introduced in 2022 contributed to its woes, leading to poor sales and delay in launching new models.
“We had raised nearly ₹300 crore in March 2022 , enough for our scale. Funding has its own cycles, and it is difficult to predict global sentiments. So, startups have to be nimble and plan way ahead,” he said.
Altigreen’s move to focus on profitability is reaping dividends, says co-founder Amitabh Saran