Ola Electric Mobility Q4 FY26 Earnings Conference Call | Concall.in

Added: 2026-05-27

[00:00:25]Hi everyone. Uh good day and welcome to Electric Q4 and FI26 earnings conference call. As a reminder, all participants will be on the listen only mode and there will be an opportunity for you to ask questions after the uh opening remarks conclude. Please note that this conference is being recorded. Before we begin, a few quick announcements for the attendees. Anything said on this call which reflects our outlook for the future or which could be construed as a forward-looking statement may involve risks and uncertainties. Such statements or comments are not guarantees of future performance and actual results may differ from those statements.

[00:01:03]Now uh I would like to request Bhaveshagal chairman and managing director and Shri Deepak Kustoi CFO Electric uh to begin the conference. To begin first I would request uh uh Deepak to start with opening remarks.

[00:01:21]>> Before we start Deepak I just want to uh say welcome everybody. an important uh quarter for us. Uh I hope everybody has had the chance to read our shareholders letter. Uh a bunch of nuances which we will cover through the Q&A and definitely something uh you know we want to make sure we highlight some of the important turnarounds that the company has now gone through over the last couple of quarters. So Deepak uh you make very much and then I'll add wherever I want to.

[00:01:49]>> Yeah. Thank you so much Babish. So good evening everyone and thank you for joining us.

[00:01:56]Financial year 26 was a year in which volumes were lower than where we wanted to be. But it was also a year in which the fundamentals of electric became materially stronger.

[00:02:09]We exited the year with industryleading gross margins at 38.5%.

[00:02:14]a much lower cost base, sharply improved execution metrics, better product quality, our first operating cash flow positive quarter and a gigafactory which is now entering a scale up. This progress comes at a important uh moment for India. The next few years will be defined by two structural shifts happening together. Mobility moving from ice to EV and energy moving from imported fuels to locally made batteries.

[00:02:43]Polar is building across both ships, electric mobility, cell manufacturing and energy storage on an integrated platform. So let me first start with the margins in Q4 for 24 25 26 consolidated gross margins reached 38.5% up from 34.3% in Q3 and 13.7% in Q4 similar you know quarter last year excluding PLI gross margins was 33.5%.

[00:03:14]This is now an industry-leading margin profile ahead of most two wheelers OEMs including ICE incumbents. It reflects the structural advantages we have built over last few years. Vertical integration, Gen3 maturity, pricing architecture, downstream control and increasing integration of our own cells.

[00:03:37]>> On this point, Deepak, I'll just pause you. I think gross margins has been definitely one of the things we've been highlighting uh quarter on quarter through the last many quarters and uh this actually shows the success of our vertically integrated approach on both the manufacturing supply chain as well as on the uh front end and many people frequently ask us about the sustainability of these gross margins and one of the potential misconceptions is that this is because of incentives.

[00:04:04]So you can see without PLI also gross margins are fairly high. Uh so you know we believe uh very strongly that our gross margins will remain a very strong structural advantage for us going into the future as we rebound our volumes and uh and our we are actually now even higher much higher than ice industry gross margins. So if we uh you know for uh EV competitors to catch up with us it's going to take a lot of uh investments into technology and manufacturing which is actually what has led to this uh meaningful strength and over the longer term also we can actually expect gross margins to incrementally keep going up. Obviously in the short term there will be commodity uh pressures as well as some of this gross margin in the last month or two we've invested into uh into aggressive growth but still gross margins will remain fairly healthy for us in the short term also and in the long term we can actually expect even more incrementally higher gross margins as we go on. Thank you Aish. So for financial year 26 consolidated revenue stood at 2253 crores with 173794 deliveries and consolidated gross margin improved to 30.6% while values were impacted through the years. The improvement in margin shows the underlying strength of our product economics and operating model.

[00:05:27]I would now actually you know um highlight the cash flows you know which you know this is the first time we actually uh have a positive cash flows.

[00:05:36]So I'll just talk about it and then I'll ask Bhish to obviously add his comments.

[00:05:41]So Q4 was the first operating cash flow positive quarter consolidated CFO was 91 crores supported by strong gross margins PLI inflows lowerex and tighter working capital discipline. The auto business delivered 213 crores of CFO and 173 crores of free cash flow in Q4. This is an important milestone as Ola move from a heavy buildout phase to a disciplined scalar.

[00:06:10]So I think Deepak you covered. I think the only point I will accentuate here is that uh you know two for revenues were low because deliveries were low but our gross margin uh leadership as well as our opex reduction both have actually now hit us right and on opex you can see there's a chart in the first few pages that from same quarter last year to this quarter our opex is actually half and that includes all opex including store lease rentals and we are further saying that in the next couple of quarters we'll actually get our opex down to about 120 crores a month. Uh so further down while business rebounds and the good thing about our business is that because we are so vertically integrated on both the back end and the front end almost 90 plus% of our opex is actually fixed that means operating leverage is very high. So as we have reduced uh our operating cost through efficiencies and as now we are rebounding sales a lot of it is translating into uh net margin for us and uh this is specifically seen in the uh auto business. So if you see segment financials our auto business like Deepak said and you know we report different cash flows for both the segments because both segments are in very different stages of evolution. Auto is now very close to free cash flow generation. As soon as we get our volumes a little bit uh higher in this rebound period, we will generate meaningful sustained uh free cash flow.

[00:07:36]Cell is still in investment phase but that also through this financial year will get into sustained uh revenue growth and overtime cash flow generation. If you see annually also compare our auto segment FI25 versus FI26 on page 15, you can see how our CFO has actually meaningfully improved over this period. And uh for our auto business there is no more capex needed as we uh scale up. So CFO to free cash flow conversion will also be fairly high. I also want to bring in here a little bit of the macro context while so far we've covered our internal financials but you know this uh what we are also seeing in the market now is demand for EVs is actually gone up meaningfully in the last few weeks and while other competitors will need to do more capex as well as new product rollouts we we have our cap you know capacity on both automotive and gigafactory covered because all the capex is now behind us so we can easily scale up to a million units a Yeah, >> we are focused and somewhere in the uh in the note you also find that we are actually right now not on 31st March but right now in the current May period running at a very low inventory level in our network because demand people are buying whatever they can find in the network from us. Uh our inventory free inventory days is actually down to 3 4 days. So and we have an order backlog now. So the company is highly focused on ramping up the supply chain uh quickly enough so that we can uh we can fulfill these orders the backlog also and I I actually expect as we fulfill uh improve our delivery timelines volumes will go up another uh 10 20% in the near term. So very uh very uh good signals from the demand growth in the market for EVs and we are well positioned to capture it without any incremental capital required.

[00:09:29]>> Thank you Babes. So the third highlight you know which Bavish also touched upon is on the opex cost reset consolidated OPEX including lease expenses have meaningfully reduced from 844 crores in Q4 2425 which is last year to 420 428 crores during this Q4 2526. This reflects network rationalization, tighter sales and service cost, lower fixed overheads and stronger operating governance. We expect OPEX to move towards approximately 350 crores. We actually spoke about in our last shareholders letter also uh over the next couple of quarters as the full benefit of 26 actions flow through.

[00:10:16]>> Couple of points on this also as on the rebound I would like to add for everybody. If you see on page six and page seven uh you can see how as we have improved service the first chart on page six service backlogs as they have gone down our sales has rebounded almost in a V-shaped recovery and the chart below that shows you week on week how our registration numbers are ramping up and on page seven you see the recovery for us has been broad-based. We are very strong in the north and east which is actually a growing EV market and we are gaining back our position in the south and west. So the recovery in market shareh is fairly broad-based. Uh yeah back to you Deep.

[00:10:57]>> Yeah. So this reset creates a stronger operating leverage. The core auto capex is already in place for up to 1 million.

[00:11:04]Baves just spoke about it for the auto business of annual capacity and giga factory phase one infrastructure is in place for you know 6 gawatt scale up 6 gawatt hour scale up. Together the asset base can support approximately 15 to 20,000 crores of annual revenue scale across auto and cell without needing for meaningful incremental capex. With the reset topics base and current gross margin structure adjusted operating aida break even is achievable at around 20 to 25,000 units per month subject to pricing mix and commodity conditions.

[00:11:43]>> I want to just underline this. I know many of people on the street investors have asked us the question on the break even. So you know if you do the rough math and all the financials here that we talk about right now are consolidated.

[00:11:56]You know in the past segment financials have created some level of confusion. So today we are just giving the communication on a consolidated financials break even. So if you see our gross margins of around 35 plus% 38% in this quarter uh our average ASP is about 1.4 lakhs or so thereabouts. So 50,000 rupees gross profit per vehicle and opex console opex cost including lease rentals of about 300 350 crores in the next quarter or so. So the break even adjusted a bit break even console comes to about 20 to 25,000 units a month. Um and in our rebound already we are seeing a you saw March April uh registration numbers May also I'm sure most of you are tracking. Another thing we've added in this uh sheet for everybody now is we are also going to show uh deliveries uh as well as registrations as well as orders because the auto industry uh the street tracks wholesale and retail uh typically for us those are very different. We don't have a dealer model so there's no wholesale retail concept. Uh registrations is what you guys consider as retail. Deliveries is what we book as revenue. Orders is what we get when the customer comes into the store and pays.

[00:13:08]And because of our unique D2C business model, these three metrics also we will publish for future clarity.

[00:13:14]Another point I want to add here is on page eight uh you see how uh while this period had service uh challenges and we were focused on solving them. Brand has actually held well because our brand has a lot of fundamental strength from the quality and the performance of our product and the proposition of price value equation of our product which is uh unparalleled in the EV two-heer industry.

[00:13:39]So you can see here a very reputed third party survey on brand strength. Our brand recall is industryleading and our NPS is also above industry averages and specifically NPS where there are no service delays is actually very very healthy. So we remain very confident about the customer thinking and the customer sentiment uh on our business and that's why we are seeing volumes ramp up quickly as we are uh as we have now largely sold service and as we are now ramping up our uh our manufacturing and back end the demand is growing along with it. Uh we also have put there on page nine a chart of uh Google searches it's just a it's the Google brand dashboard itself. So you can see Ola is by far the highest searched brand in the EV space in India and all these are advantages and you know our business model does not have any spends on marketing etc. So uh that also benefits when we think of operating costs.

[00:14:36]>> Thank you. Um so execution improvement uh which you know Bavish just talked about I'll just um add some more flavor to that. So execution improved meaningfully through the year. Product quality is improving with Gen 3 with warranty cost is 70% lower than Gen 2.

[00:14:52]Service metrics have also improved sharply with service stat down 88% same day closures at approximately 87% and part dependency down 69%.

[00:15:03]Execution approves sales started responding April registrations were up 20% month on month while the broader each wheeler industry declined by more than 22%. on warranty debug. I would like to highlight for the team for everybody on the call here on page six of the shareholders letter uh in the second paragraph you can see how year our warranty costs have actually come down such in a very material way. You know in FI25 we had a 500 plus cr of warranty cost in FI26 it's only 60 crores 59 crores to be accurate. So you know what we've been sharing with you guys on our gen 3 platform being by far the industry leader it is validated by our one of the costs in FI26 and uh you know that also kind of tells you that some of the service challenges that we had were largely linked to service network operations which also in the KPIs again you can see in that we have meaningfully improved. So looking ahead we we feel very uh optimistic about our uh sales uh as well as customer sentiment.

[00:16:06]>> Looking ahead uh to Q127 we expect 40 to 45,000 orders and consolidated revenue of 500 to 150 crores nearly double of the Q4 level. As volumes recover, we expect the auto business to move towards adjusted operating avatar and cash free low cash flow positivity to financial year 27.

[00:16:32]>> You know there are a lot of questions on the bike and so I wanted to make sure that you know we actually address this as part of our narration.

[00:16:40]>> Let me let me give the headline here. So you know we launched the bike about a year ago and we've been very consistent about our communication in the in the earnings calls that we are scaling it step by step. So now we are we are very very happy to say actually that we are seeing good traction both on the EV bike industry uh bike industry itself in the last 6 months or so has more than tripled a very small base right now but the trend is very aggressively growing.

[00:17:06]You know, think of it as where EV scooters were 5 years ago before Ola really uh entered the market in a big way and scaled it up. Bikes are also there and our market share in bikes is 50 plus%. And bikes are a little different than scooters in terms of product. The customer expects more range in the bikes and that's why our bike portfolio has slightly higher range than scooters for the customers and specifically at the top end actually only because of our own cell the 4680 cell we can offer almost a 500 km certified range product. So there's very strong interest in the bike in customers. Again uh we are constrained not by demand there but by supply. Uh we are seeing significant uptake in the roadster product in the northern belt of India which is the heartland of the bike market of India and I actually feel uh now especially with the petrol prices in the macro bike EV moment is here through the next couple of quarters and we are fully ready to uh to take best advantage of that.

[00:18:05]>> So roadster is becoming our second auto growth engine. U motorcycles are India's largest two-heer category and EV penetration remains very low. Olar now has 50% market share in electric motorcycles and bikes contributed 15% of April gross orders with products going up to 9.1 kwatt hours battery capacity and 500 plus kilome certified range.

[00:18:32]Roadster is built around the core motorcycle customer needs of range, performance and reliability.

[00:18:40]The Gigafactory is now entering the scale phase.

[00:18:44]>> We currently have 2.5 gawatt hour operational capacity. Installation up to 6 gawatt hour is largely complete with commercialization expected to be completed by the end of this quarter. I think before we go into operational updates macro commentary the way the country's energy security requirements and narrative is shaping up Ola electric is the only company which is actually straddling both of the critical domains one is EVs and one is batteries now it's very clear from both customer sentiment as well as government sentiment that EV encourage all of you have seen how EV policy today there was some media articles that for buses etc there will be incentives etc. So EV encouragement is from a government as well as consumer side going up. Uh but also along with EV growth two other things are happening.

[00:19:39]Uh one is uh the clarity in the policy stakeholders is very clear that we will have to very quickly accelerate domestication of uh the battery supply chain and your company there is the best positioned uh to do that. Then in the power grid itself it's very clear that you know our solar roll out has kind of maxed out unless we start deploying batteries along with it and that's why you can see already some announcement on floating solar along with batteries. So the government uh sentiment as well as policy sentiment whatever we read from media seems like there will be more just like ALM in solar there will be ALBM ALCM uh there will be hopefully some extension in the ACC PLI uh there will be domestic procurement for DESS deployments mandates coming coming soon and our battery business is actually right in the center of that uh potential for growth now in our battery business we have built our own domestic IP and that's actually the reason why we have been able to uh create and productionize and scale up the gigafactory and get commercially viable yields and prices and you know we have six gawatt already installed six gawatt 2 and a half was already done the remaining three and a half is getting done this quarter was supposed to be done a month back but due to the Iran war some containers got delayed but it's it's getting done in June and uh we are actually going to be uh expanding that 6 to 20 gawatt hour by next year but only by raising capital separately at the cell entity uh which also we have a lot of inbound interest from private equity players given the leadership of this asset that we have created u so that's you know I I just want to underline this important point on the macro side that our company is very well put in position to really leverage the tide and come you know create this energy security stack for our country in a meaningful way and uh and monetize it.

[00:21:49]Yeah, there is some commentary here on our technology. You know, we will probably skip that in our commentary.

[00:21:54]But another point I want to make in our Gigafactory business is that we have actually Deeper gave you quick operating metrics. You can find that in page 12 and 13 also. But now we have focused on ramping up production to get uh revenue in the Gigafactory and there are three engines of revenue built in this. If you go to page 13, you will see the chart there. Uh we have ourselves the 46 series is already out there. Uh we are also working on a prismatic cell which will be out soon. We haven't yet released details of that. But there are three uh revenue engines now. First is uh uh mobility which is EVs. Uh obviously our captive demand will eat up about one and a half to 2 gawatt hour by the end of this financial year. But we are also now in conversations with external companies uh Indian and global who want to buy our own cells given that they are world class and industryleading specs. The second demand engine which is already built is Shaki. Uh Shaki we had launched last quarter and we have already delivered some to customers. We are constrained by supply of ourselves because we are prioritizing our own auto business moving to ourselves uh in general over Shaki production. But as Gigafactory ramps up through the next few months, Shaki will also meaningfully ramp up. And there we have very strong demand from both retail as well as B2B customers. Telecom towers, petrol stations, dark stores, uh other organized retail chains. Everybody today has diesel generators and lead acid batteries and all of them want to replace that with lithium. The third big pillar which we are now creating is the grid storage. Uh so this product is called Mahashaki which is bigger more energy. So Mahashaki it'll be built on our prismatic LFP platform. Uh we are right now in product development. We have had conversations with many platforms there.

[00:23:40]We have shared specs. People are excited about our product there and um more details will follow through the next couple of quarters.

[00:23:50]>> Okay. So um I just wanted to conf you know um emphasize that you know around 15% of the orders are already on our product using March sales >> and we plan to transition the full vehicle portfolio to our own sales by September 2026.

[00:24:04]>> I think I would underline that deep this is a meaningful uh transition already 15% on our own 4680 sales uh in the market very good feedback from customers and by uh end of next quarter we plan to transition everything. So it's it's a meaningful ramp up of our gigafactory happening as we speak.

[00:24:22]>> So to summarize, OLA is positioned across the two important pillars of India's energy future. Electric mobility and batteries vehicle create captive demand for the gigafactory cells improve our vehicles through range cost and supply chain control and the same platform opens up energy storage through Shakyan market.

[00:24:41]Our financial year 2627 priorities are clear. recover volumes, hold margin leadership, reduce opex, ramp up the gigafactory, improve auto cash generation and scale Shaky and Mahaki.

[00:24:56]Thank you so much. Now I will open the floor for question and answers uh to the participants.

[00:25:03]>> Thank you Babish and Deepak. Uh now we'll begin the question and answer session. Anyone who wishes to ask a question may use the raise hand option.

[00:25:12]If you wish to remove yourself from the question queue, you may press raise hand option once again. Participants are requested to unmute themselves before asking the questions. Uh before asking the question, we request you to introduce yourself with your full name and your organization. Uh now we'll wait for a moment while the question cue assembles and then we'll begin with the Q&A.

[00:26:21]Uh thank you everyone. Uh we'll take the first question from Mr. Mid Dohi from White Oak Capital. Uh please unmute yourself and ask a question.

[00:26:34]>> Hello. Hello Tim. Am I audible?

[00:26:36]>> Yes, you are.

[00:26:39]uh thank you for giving me the opportunity to ask the question and first of all many congratulation to have a good uh numbers in terms of margin. So just I want to know that uh are we planning in last quarter you told that uh in quarter four we are going to have a good uh revenue but still it is not reflecting also uh your team has uh given the data at the end of March and you have a very good number of sales why it is not reflecting in terms of the number that is my >> okay mita I don't know what exactly you're referring to but uh Our registrations are public data right so March April and May is trending towards you know 14 to 15,000 so we are growing volumes registrations our orders are growing ahead of registrations but like I said we have a production backlog now so some of that will come through uh in this quarter in terms of registrations uh in terms of revenue see Q4 was a lower revenue because Q4 was also like we said a a quarter where We focus a lot on our operations to fix the operations and then scale again both on cost as well as customer experience and we started scaling volumes again in the in the middle of March onwards and you you know the good thing about our businesses volumes daily and weekly and monthly publicly in terms of registrations uh the cost and the gross margin improvement uh is what is once a quarter you guys are able to track uh over a period of time. So what I can say now is our volume forecast for Q1 uh we have given in this is uh 40 to 45,000. These are orders registrations might be a little up or down. Hopefully it'll be in the same range but orders we are we're seeing good healthy pull in in terms of demand.

[00:28:30]Thank you very with the regards of follow-up question just I want to know that are we still focusing on electric two-wheeler and uh like how you are thinking to main focus like for the new products of sui and uh that kind of UPS systems or uh two wheeler will be still remain in the focus for the business our company has two segments two business segments right so two wheeler is the core business because that is generates 100% revenue today. But our Gigafactory was also always built with the vision of building cells and ESS battery storage solutions. Right. So the Shaki product is already built. It has actually a lot of carryover platform from the Google platform. So in that sense very low cost of capex and R&D to build the Shaki product. Uh we will be ramping that up over the next uh couple of quarters. But like I said, our priority is to uh make our own sales go into our automotive business first and then as a gigafactory ramp becomes beyond our automotive requirement, then we start scaling up Shaki. Uh next, but demand for Shaki also is very high given that you know battery storage is a very very fast growing theme.

[00:29:47]>> Okay. Thank you, sir. And last time, thank you so much. Thank you.

[00:30:09]All the best. All the best. Thank you so much. Thank you.

[00:30:12]>> Thank you, Mr. Dshi. We take the next question from Mr. Arvin Sharma of City.

[00:30:17]Please unmute yourself and uh ask a question.

[00:30:23]>> Hi sir, good evening. I hope you can hear me. Uh >> yes. Hi Arvin. Hi.

[00:30:29]>> Hi. Hi. Hi. Good. Thanks for taking my question. Um on the on the demand front since you said the bridge means around 20 or thousand a month. Uh what is a bridge from the current levels to that is it driven by motorcycles or driven more by service? Uh what would be the key drivers for the volumes? That would be the first question. Yeah. So Arvin firstly we are still in our rebound phase in terms of volumes because what volumes in Q4 were not our steady state volumes right it was impacted by our internal operations but you have seen the recovery since that now it's the third month of recovery and we are actually not just recovering we are growing month on top of that rebound right so I believe another couple of months most likely June July also we will see a continuing rebound of our volumes u the rebound itself should get us to about 17 18,000 units a month right now that will be a mix of both scooter and bike is about 15% of our volumes now beyond that you know as like I said now we're running a production backlog as we are ramping up our supply chain uh the factory anyways has capacity so we don't need to do capex but as we are ramping up our suppliers as our suppliers are getting production uh scaling up again for us uh demand is also you know ramping up so I do expect just uh better uh you know stability on service and improve improved uh inventory availability will lead us to closer to the 20,000 22,000 number over the course of next quarter.

[00:31:59]>> Got it. Uh thank you. And um if you may just give us some more granularity in terms of your own sales versus what you import what is if you can share even directionally what is the cost advantage that you are getting right now and would it increase further when you move to 60 G? Uh good question Arvin. So actually if all of you know that lithium has entered an upcycle in the industry. So our advantage of our own cells is actually improved. So even at this low volume production where we are today, it is cheaper for us to make our own cell versus buy a cell from outside. As far as bomb cost is concerned, obviously the overheads on the Gigafactory right now are are with more scale will get factored in. on just pure bomb cost alone it is cheaper for us to build versus uh import uh and that's at these low volumes I do expect as we scale up our gigafactory towards the 6 gawatt hour over the course of this year we will get a 10 to 15% advantage uh on building our own cell including the operational overhead of the factory right so you know the advantages of making in India are actually coming out to be very true in the uh already in our business Got it. Thank you so much for asking the question. That's all from my side.

[00:33:16]Thanks so much.

[00:33:17]>> Thank you. We'll take the next question from Mr. Wenitesh of Kot Los. You may un unmute yourself and ask a question.

[00:33:39]>> Okay. you know for you told you will be scaling up to 60 car there is a man talk about this >> Bangladesh we didn't hear you clearly it got garbled up can you please repeat your question >> or if you're not here you can even type it in the chat box or there's no chat box so you can please repeat your Could you please repeat your question?

[00:34:17]>> Yeah. Uh sir, what I said is when you for the you know battery segment Yeah. when you >> okay I think uh we'll move on to the next question uh which is from Mr. Amod Khanar of Grestle please unmute yourself and ask a question.

[00:34:45]>> Yeah. Hi congratulations on the margin expansion. Babish my question is twofold. One uh is the battery capacity currently that you have and currently that is operational is it now 100% being consumed in the in the scooter segment itself and you do not have anything for shaky that was my first question. Second is about marketing and advertising. Uh any specific reason as to you do not advertise big time in a print media?

[00:35:13]Thanks. These are the two questions.

[00:35:15]Okay. I'll answer the second one first.

[00:35:17]Uh uh see uh as a philosophy we believe that our product speaks for itself and uh all along in our journey we have been able to uh succeed with that philosophy and as a result our costs are also controlled. So we don't it's not like we have anything against print media. We don't even do TV actually. uh you will not see us sponsor any IPL team or any uh codings or anything u uh because our product is uh so far ahead of competitor products it delivers great word of mouth uh now that that doesn't mean we will not do advertising you know we might do some advertising in the coming months as we see opportunity for educating a larger mass of customers on the benefits of EV as well as about how our brand has turned around from uh some service challenges in the past so we might do something as of now we don't see the need to do anything immediately.

[00:36:06]On your first question, see the 6 gawatt hour out of this you know roughly rule of thumb you can assume three is already commissioned three is getting commissioned by end of uh next month.

[00:36:16]Now the three that is commissioned already is in a ramp up phase. So the way gigafactory and gigafactories are very complex you have to commission first you have to install the equipment then you commission the equipment and then you ramp up with improving yields.

[00:36:30]So the water that we have already commissioned is in a ramp up phase with good yields.

[00:36:35]>> So as we are ramping up and we also have to ramp up supply chains you know people who send us the cathode powder anode powder electrolyte in India all of that.

[00:36:42]So as our whole supply chain is ramping up we are increasing our productivity and our output of the gigafactory. Uh so over by by end of next quarter which is September we expect our gigaf factory to be producing about 2 plus gawatt hours already and uh for the whole year the allocation of capacity is 2 gawatt hour to our in-house business maybe 1 plus gawatt hour to external auto sales and uh the remaining is focused on shaky and mashup. Yeah, thanks for that. And one last quick question in terms of monetizing, if you may want to call it that way, the the sale business, I mean there were media articles in between that about 2,000 cr monetization and money should flow into the company and so on. I I am I I understand you cannot speak much about it unless you make a public uh uh disclosure on that. But h are things moving on that direction?

[00:37:38]Ahmmed I can't share too much but uh you know we have a lot of interest from people on that front and like I said our ambition in our cell business is to be the largest in the country today we are the first and the largest but that space is going to expand fast and we will be absolutely focused on leading that space being the largest in capacity and revenue and for that we will have to expand beyond 6 gawatt hour but we will do that when we raise capital in the subsidiary and that will be in due course uh you know we will let you know.

[00:38:07]Great Bhaves. Thanks a lot. Congrats on the increasing uh delivery numbers. Best luck.

[00:38:13]>> Thank you.

[00:38:14]>> Thank you. Um we'll take the next question from Apua Desai of Kot. Uh please unmute yourself and ask your question.

[00:38:25]>> Uh so hi Bhavish. Uh so two quick questions from me. Okay. So the first question is in regards to the ASP calculation that you have given. Okay.

[00:38:35]So what you've mentioned is that there's a one-time change in the revenue recognition policy. So could you maybe elaborate on that?

[00:38:44]>> Yeah. So Aurva what we did was we uh we sell some uh let's call it care packages or extended warranty packages which we which is a let's say three-ear product 5ear product uh but we uh we were recognizing the revenue up front. So this time with our auditors we decided that we will not recognize it. up front.

[00:39:05]So that's about a 20 30 cr hit in this quarter. Is that correct?

[00:39:09]>> Yes. Yes.

[00:39:10]>> Yeah. I'm uh yeah I'm not the financial expert but this is uh what it is. So hence you see the ASP has come down but actually that revenue will come every quarter right because we have already done the same.

[00:39:21]>> Okay. So this was more of a one-time thing. Is that correct?

[00:39:26]>> Uh it'll be a one-time correction. So every quarter now you will see this revised approach.

[00:39:31]>> Okay. So would that be the case for the earlier quarters as well? Would the numbers be revised or would that not be?

[00:39:38]>> Maybe Deepak you can ask.

[00:39:39]>> No. So you know whatever was the impact you know we already taken baked in already in these numbers and hence you know there is no one time effect which you would see it will be already baked in in the numbers. So whatever numbers you publish will continue with the same numbers.

[00:39:54]>> Okay. Uh okay. So coming to my second question. Okay. So it's regarding the Gigafactory. So from what your shareholders report told uh so I understand that you want to ramp it up to 20 gawatt hours. So I want to understand two things. Okay. So first is the I want to understand the rational behind you know going for a ramp up pretty quickly and the second question is maybe if you could maybe shed more light on the order pipeline or something. I think you know that is all from my end.

[00:40:27]>> Sure Rapurva. So uh like we said in the report in the letter also we will not be ramping up beyond six right now from a capital allocation perspective right uh we will first consume the you know grow into the 6 gawatt hour capacity uh but uh the industry demand in India is growing faster so just to be able to lead the industry we will expand capacity especially around the prismatic cell capacity today our capacity is the cylindrical cell we will expand capac capacities into the prismatic cell capacity but only when we raise capital at a subsidiary level and that is in our plans for this financial year.

[00:41:12]All right. Uh we'll take the next question uh from Mr. Vipple Agraal of HSBC. Uh please unmute yourself and ask the question.

[00:41:20]>> Hi good to see you.

[00:41:22]>> Yeah. Hi Bish. Thank you. Thank you for taking my question. Uh three questions.

[00:41:26]Uh first is you talked about lower KPIX like what will be the now how we should we see uh the total capex for next 2 to 3 years perspective like we see that you already have 1 million capacity in vehicle and I guess you will having you'll be having just couple of quarters remaining for the capeex in uh battery plant >> yes >> so how should we see a capeex in next two to three years >> good question because in auto we you know on an annual basis you should expect very incremental capex maybe you know 50 odd crores that's about uh just maintenance capex uh because we have very large uh capacity already built out. So that means conversion of uh you know aida to free cash flow will be fairly high on sell business also like I said we have done all the capex for 6 gawatt hour payouts are happening in this current Q1 and a little bit in Q2 beyond that you will not see any more capex till we get some uh capital into the cell company separately. So from that sense actually the business's uh capex cycle is behind it and now focus is on scaling up utilization and monetization.

[00:42:33]So, so if you can quantify poss if you if it is possible to quantify like what kind of outflow we are looking in 20 by 27 and what kind of maintenance capex we are looking by 28 if possible if you can quantify >> again rule of thumb maintenance capex will be sub 50 crores annually right I'll just add one more nuance we do have some R&D which we capitalize about 20 30% of our overall R&D expenses that will keep coming in but in terms of PPE capex So that'll be below 50 crores a year.

[00:43:06]>> So okay. Uh yeah my coming next question is on R&D only. So how should be like like you are largely done with your product uh development as well and your gen 3 is also doing pretty well. So how do we how should we see uh the R&D expense as well in coming years. See, Whipple, we are a technology company and we've always maintained that our competitive advantage comes from both our manufacturing depth of vertical integration as well as our technology depth of owning all key technologies inhouse. And you can see how that has played out in terms of gross margin, product proposition, uh all of that stuff. So we will continue to invest in R&D across both auto as well as sell business.

[00:43:47]It'll be a you know right now obviously as a percentage of revenue it is high because revenue was subdued in through fourth but generally it should be in the mid single digits of revenue going ahead as revenue ramps up.

[00:43:59]>> That makes sense. Thank you. My second question is on the cash position right now basically like since you talked about like lower kix right now and your low. So are we looking at any major cash burn in MI27 or we will should be likely maybe like at par? How should we look at that part of the business? Yeah, see we have a uh on 31st March we had about 1,550, 1,600 crores of uh cross capture about 2500 crores of debt. So we had a net debt of about 950 odd crores. Uh we don't expect any there will be about 3 to 500 crores of operating cash flow burn over the course of this year as the volumes go up. It could be lower if volumes rise faster but generally operating cash burn like I said after 20 25,000 orders a month will be positive we'll be making operating cash flow and on free cash flow just capex is uh minimal going forward we do have some debt servicing and debt repayments coming up I think through this year we'll have about 400 plus cr of uh debt repayments and we might also choose to accelerate some because right now our cost of debt is slightly higher >> uh thank you that was a pretty detailed Sir uh just last one on qualitative aspect of the business. So so uh like what we have seen in last 3 years when you started uh your new stores the store experience was pretty very good and eventually deteriorated but what we are seeing right now it has improved but again not to the extent what we have seen 2 years back.

[00:45:26]>> So so maybe if you can talk a bit on your uh store strategies like do you plan to get new dealers or maybe you it will be like company own company driven how do you plan to improve that uh the whole experience for the customers? So vibble our experience has improved you know from let's say two quarters or one quarter a and we expect in the next one or two quarters it it will be ahead of industry standards in all key metrics that matter be it the service turnaround time be it the quality of the people we have there the sales process etc. We are focused on improving experience we've spent a lot of time building the right uh backend processes to make uh front end experience better.

[00:46:07]We don't plan to have any dealerships in our auto business. Uh we believe our strategy is uh correct. We had some execution uh slip ups through last year but now the company has uh meaningfully overcome them. That said, there is still some work to be done like you correctly pointed out and the good thing is our volumes are ramping up in parallel. So as we work through all the improvements in the front end of the business over the next quarter or two, further you will see customer sentiment and sales ramp up.

[00:46:35]>> Yeah. Uh thank thank you for that answer. That's all from my side.

[00:46:38]>> Thank you.

[00:46:45]>> Uh we'll take the next question from Mr. Thuhan Singh of Sonalika Family Office.

[00:46:49]Please unmute yourself and ask the question.

[00:46:54]>> Hi guys. Uh thank you for taking my question and very congratulations on the solid results you guys have. Uh I just wanted to understand the research and development part of Ola's battery business like I read somewhere that uh you guys are focusing on solid state batteries and sodium ion batteries. So uh how are we progressing on these uh long-term initiatives I could say?

[00:47:20]>> Yes. Uh uh very very good question. Um I never thought I'll be asked a technical question in a investor uh meet but actually you read it in our in our letter itself on page 12 uh the cell technology road map shows you that our road map ladders into on the performance side solid state and on the cost side sodium. So we have uh these technologies already at a lab scale already working.

[00:47:45]Uh we are not focused on spending a lot of capital on on getting them manufacturing ready right now. Our focus is to ramp up our 46 series NMC. We have though brought in our LFP uh sell also through the through the next quarter. It will start ramping up in our factory.

[00:48:02]But we are ready as the industry matures for solid state and sodium. We will be bringing those products to market also.

[00:48:17]Sorry. Is is there a follow-up question or does that uh answer your question?

[00:48:25]>> All right, we'll move to the next question from Mr. Jenner of J&J Holdings. Please unmute yourself and ask your question.

[00:48:38]>> Yeah, hi Daves. Uh thank you for taking my question. I had a couple of questions. One was relating to the service issues of many videos that I've watched online. The service uh issue seems to be with part unavailability.

[00:48:52]>> So I just wanted to understand that why is that happening like even if it is a ser you know gen one or gen two scooter >> how how is it that parts are unavailable?

[00:49:03]>> So you caught it well Jan. See firstly some of the videos on social obviously are old videos. So they keep recirculating online due to competitive pressures. But you are right, one of the challenges we did face was part supply chain. See as we had ramped up our network, we because we in a in a dealer model, the dealer buys the parts and the OEM distributes it through traditional distributor chains. Now we don't do that. We send our parts directly to a service center.

[00:49:32]So earlier we were not stocking any parts in a service center. You know that led to even for a brake pad replacement the guy had to wait 10 days uh and our parts procurement from our suppliers was also after a part requirement came. So actually led to 20 30 day fulfillment timelines. So now we have streamlined a lot of that. Uh so now parts are stocked in the service center as well as the part procurement is done basis forecasts. So all of this is just execution uh fixes that we have done and now parts have improved. There's still some work to be done. Some parts we still have to because like I said we are still ramping up our supply chain. Some parts are common between our production and service. So we are prioritizing production but we are ramping up the supply chain so that we can fulfill part requirements better in service also.

[00:50:14]>> Okay. Uh thanks and uh one question regarding uh BESS. Why have we selected NMC to go into BESS when we have LFP and also like mostly around the world it has only been LFP. So anyone getting LFP cells from China and putting into a BESS product in India would start off much cheaper than our Shaki product. So why would we >> so we haven't selected NMC the Shaki product will move to LFP once our LFP product comes out next quarter. We had started with NMC for our auto business and that's why you know even now we have decided to ramp up Shaki slower because we're focusing our NMC 46 series into our auto business uh through next quarter but we wanted to give be in the market with Shaky. So many many customers actually are okay with paying the price of Shi with the NMC product today. So we are starting to take that business but by next quarter Shaki will have LFP so that we can ramp it up faster.

[00:51:11]>> Okay. And my last question what uh there I've noticed that there's always there's been a slip up in terms of some products moving into you know future quarters or maybe even future years like the gig product and >> um so >> see what we did yeah I understood your question.

[00:51:29]We decided and I think we made a public statement of this also. Maybe you missed that that we have we have a product road map in our shareholders letter also. You can see it somewhere in the in the slide pages. But we decided we will not launch new products till our volumes get back up because we wanted to be more disciplined on new capital allocation for for new products. Now as we have stabilized our front end operations as volumes are ramping up again we will uh we will actually go back to some new product launches over the course of this year.

[00:51:58]Okay. And just one last comment. I mean, I think we will in interest of time, we will uh No, >> it's a posit it's a positive comment.

[00:52:06]Sorry. Just wanted to just wanted to say that there was a video from some of some GI scientists or some Twitter handle in terms of the technology that goes into your batteries and I was very pleasantly surprised at the amount of work that you have done.

[00:52:23]just would like to say that I think I'll need to even show the investors maybe you know in terms of maybe some kind of a analyst meet over there and stuff like that because it seems like you are doing the hard work but in terms of the market it's not coming even through analyst notes >> so a very fair point Jan we are planning a analyst and investor day in our gigaf factory sometime maybe in a month or that's on our agenda so thank you so much for seeing that technical video and appreciating it >> thank thank Thank you.

[00:53:03]All right. Um I think with this we uh we we come to the conclusion of the session here. Uh we appreciate your time and uh and all of your questions during the call today. Uh thank you so much for joining us and we look forward to meeting you all during our next earnings conference. Uh thank you for joining us.

[00:53:20]You may now log out from the conference hall. Good evening.