Amara Raja investing Euro 10 mn in European EV battery start-up. Nothing to get over excited about at this stage.

The Company announced plans to invest in InoBat Auto (IA), a Slovakia based start-up focused on research and development of batteries for electric vehicles and production of lithium-ion battery cells as well as tailored and customs cells.

Key points to note –

  • IA was founded in 2019 and it’s 1st funding was a Euro 5 mn grant from the Slovak Government.
  • Since then it has also raised funding of Euro 10 mn from CEZ (one of the major European Utilities) and an undisclosed amount from Rio Tinto (the global mining giant). Not all of this raise is necessarily equity and it seems that a part of this can be debt/ convertible.
  • Even Amara Raja’s investment is a combination of 0.04% equity stake and balance convertible loan.
  • IA is currently developing a battery R&D production line in Voderady, Slovakia. The next phase of it’s project will focus on a manufacturing scale-up through multiple gigafactories planned across Europe and globally. The Company has done some prototype and in September 2021 signed it’s first commercial agreement with an aviation customer.

Taking everything into consideration, I would not get over excited about Amara Raja’s investment at this stage. I am sure Company would have done it’s due diligence before committing the funds.

However, at this stage it’s no more than a start-up  investment for me. How it will unfold and how advantageous would it be for Amara Raja’s long term potential is very difficult to comment. Lots and lots is happening in the global EV sector and what will work and what not, only the time will tell.

I will look forward to a solid visibility of the subject investment on Amara Raja’s future prospects. Hope, Company updates us regularly and timely on the same.

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