For any entrepreneur, seeing their firm go public is a good feeling.
Bhavish Aggarwal: Thanks very a lot in your needs. You are proper, it is an awesome feeling for any entrepreneur. I feel that is what entrepreneurs try for, obtain this milestone after which transfer on from there. So it is a massive day for everybody at Ola Electrical and our crew has been working arduous to make this present day attainable.Ola Electrical is without doubt one of the youngest startups within the historical past of India. It hit the market in lower than 5 years.
Bhavesh Agarwal: In fact, when somebody tells me that we’re such a younger firm that we will go public with income or market capitalization of this measurement, I’m additionally shocked by this information. That is fairly an achievement and I need to thank the crew. We at Ola have talked about earlier than in your present that our mission is to create the way forward for electrical automobiles, the power way forward for India, and we need to obtain this future as quickly as attainable. We’re fulfilling that mission and the general public is with us now. We’re very excited concerning the future.
The inventory rose 13%. When international volatility returns, you have left cash on the desk. We had a massacre on Monday and issues went easily, in order that’s an awesome listing.
Bhavesh Agarwal: Our objective isn’t short-term optimization. We need to make certain we worth it to enchantment to all traders and hopefully make some cash. This journey of Ola Electrical is the story of Made in India, the story of India’s future, and this journey has simply begun. It is a journey that spans a long time and we hope to have the help and cooperation of the Indian public market. We’re joyful that folks think about us, costs will rise and fall, however essentially our efforts shall be to create worth for the nation.
Now that you simply’re public, we will perhaps focus on some forward-looking information. When an organization turns a revenue, it goes from pink to black. When will Ola Electrical flip inexperienced?
Bhavesh Agarwal: We’re in the midst of the season and the outcomes of the primary season shall be introduced quickly. We’ve not introduced a date but, however it is going to be introduced in per week or two. Traders shall be very excited about our efficiency. We’re additionally happy to share our efficiency final quarter. Our focus is Profitable growth. We hope to proceed to enhance our profitability and, pun meant, construct a sustainable enterprise. That is our focus and we need to proceed to try this. So, you are going to hear extra from that. One other factor I need to share is that we’ll have an enormous product launch on August fifteenth. That is our annual occasion and we host it on Indian Independence Day as we need to share our imaginative and prescient, merchandise and all our know-how. So hopefully folks can pay consideration. We’ve some very thrilling information for everybody.
I will get into the specifics right here, as I’ve that massive launch day arising, August fifteenth, which is simply a couple of week away. What do you suppose is the estimated measurement of the Indian two-wheeler trade? What are the scale of an electrical two-wheeler? In actual fact, in case you have 25% market share now, how are you going to take care of that management?
Bhavesh Agarwal: India’s EV journey continues to be in its infancy. Three years in the past, after we began producing our first product, the EV penetration of two-wheelers in India was 1% or 2%. Right now, within the scooter subject alone, the penetration charge of electrical automobiles exceeds 15%. We’re nonetheless solely scratching the floor. About just a few months in the past, we launched scooters below one lakh rupees, which labored very properly. We’re seeing gross sales throughout the nation in small cities, rural areas and upmarket centres.
We consider there’s a number of potential for electrification of all vehicles and scooters in India. We’ve made it clear that we’ll construct bikes. Provided that two-thirds of the Indian two-wheeler market is bikes, I’m excited to share with folks the kind of bikes we’re launching as quickly as attainable. Subsequently, we’re very excited to share our merchandise on this space with you quickly.
The electrification journey has begun and the story ends with the automotive being 100% electrified. Inner combustion engine vehicles trigger inflation. Car prices proceed to rise as a consequence of compliance with emissions rules and rising gas prices. However electrical vehicles are completely different. For electrical automobiles, the price of the automobile is falling with every technology as a consequence of ever-lower battery prices. The Prime Minister’s imaginative and prescient is to offer free electrical energy to everybody by way of rooftop photo voltaic. Think about a future the place your electrical automotive shall be charged at dwelling by way of rooftop photo voltaic, so operating prices shall be zero. That is the longer term. I do not suppose there’s any controversy about that. Eastern time now: If EV four-wheelers and ICE four-wheelers or passenger vehicles are used, the associated fee financial savings are important for electrical automobiles. What are the numbers for two-wheelers and bikes? If one makes use of a traditional ICE engine, Hero Honda’s previous advert, 80 kilometers per liter in comparison with an electrical automotive, the place is the comparability?
Bhavish Aggarwal: If I perceive your query accurately concerning the worth that buyers must pay, for two-wheelers, the ICE worth for a similar class of automobiles and the value of electrical automobiles for a similar class of automobiles are actually the identical.
The worth of our S1 Right now in four-wheelers in India, there’s a delta, however as we’re engaged on the provision chain, particularly the lithium batteries within the gigafactory that now we have constructed, now we have began trial manufacturing and can begin business manufacturing early subsequent 12 months, as soon as that’s accomplished are available , this unit and your entire provide chain shall be used for all merchandise. Hopefully, the value of electrical vehicles will quickly be at or beneath the value of inner combustion engine vehicles in several product classes
Once you say battery costs are coming down, that is evident regionally and globally, however is not that cannibalizing your battery enterprise? Revised between 20% and 30% on a CAGR foundation. Is that this an actual menace to your battery enterprise? By way of your present information, what do you suppose would possibly utterly change?
Bhavesh Agarwal: Ten years in the past, batteries price $1,000 per kilowatt hour; now, batteries price $1,000 per kilowatt hour. It is $100 per kilowatt hour now and will attain $50 per kilowatt hour by 2030. So, as a result of the battery isn’t a commodity, it’s a technology-driven part. The price curve will solely go down with time and know-how.
Proper now we’re not within the commodity a part of the battery worth chain. For instance, we don’t refine lithium, or we don’t mine, refine lithium or manufacture midstream processes and promote it to upstream or downstream companies. We’re engaged within the manufacturing of electrical automobiles and are integrating backward into core battery manufacturing. If the enter price is diminished, it is going to be helpful to us each on the automobile stage and on the battery stage. As costs fall, the penetration of electrical automobiles, in addition to batteries and storage, will rise.
At this level, the entire pie goes to get greater, and we as an organization aren’t know-how takers. We’re know-how makers. So our philosophy from day one has been that for these core applied sciences which are crucial to our future, we are going to construct them in-house and now we have very important information throughout your entire stack from electrical automobiles to lithium batteries property rights, so we’re controlling our future within the tech world and never reacting to what others are promoting to us.
Based mostly in your understanding of the place the EV market tendencies are heading, do you suppose EV prospects shall be joyful to pay extra as a result of they’re getting an EV that is sustainable in the long run?
Bhavesh Agarwal: Even in the present day’s actuality is completely different than what you stated. The truth is that even in the present day our two wheelers are priced at or beneath par ICE productson this worth they provide extra know-how, software program, electronics and really low driving prices as a consequence of decrease complete price of possession, decrease gas prices and a driving expertise of excessive torque, no vibration, to not point out the texture of driving Feeling drained whereas driving.
For my part, it is a given. Electrical automobiles are the longer term and we’re seeing this globally, not simply in India. By means of investments in vertically built-in manufacturing and provide chains, now we have been capable of deliver prices in step with inner combustion engine automobiles. Going ahead, as we strengthen our provide chain, our focus shall be on driving profitability and progress by making certain our merchandise are priced attractively for patrons.
For any shareholder, there are two components that they all the time take note of. The primary is working leverage and the second is monetary leverage. Because of this IPO, it is possible for you to to scale back your debt. And since your money move is rising, working leverage will come into play. How do you see working leverage and monetary leverage altering? Can I say that inside the subsequent 12 to 18 months, the advantages shall be mirrored in your revenue and revenue assertion?
Bhavesh Agarwal: You are proper, working leverage is essential, particularly within the manufacturing enterprise and our financials, which now we have reported into fiscal 2024. In comparison with fiscal 2023, EBITDA margin elevated by 24 share factors from unfavorable 43% to unfavorable 19% in fiscal 2024, and that is working leverage at work as a result of our income grew 90%.
In manufacturing, as output will increase, mounted prices do not enhance, so you may make increasingly more earnings. Now, we’ll see extra of this as we go alongside. Our gross sales are rising. Our first quarter quantity is situated on the Vahan portal. Once you examine them, you may see that quarter to quarter, they’re increased. Subsequently, we count on important working leverage to emerge quickly. One other level on the debt subject, a part of the IPO proceeds shall be used to repay debt, which may also scale back the corporate’s curiosity prices.
Is Ola Electrical a producing firm venturing into the EV house, or is it a know-how firm that understands your entire ecosystem of EVs and can proceed to construct on it? It began with electrical two-wheelers, then electrical bikes, then batteries, and it retains rising. So, is Ola Electrical a producing firm or a know-how firm?
Bhavesh Agarwal: I am a technologist at coronary heart. I spend most of my time with our technical workers. I’m a co-author on lots of our patents. So we’re primarily a know-how firm with a powerful give attention to constructing vertically built-in provide chains and manufacturing for the way forward for electrical automobiles and power. We construct our know-how, we manufacture core parts and differentiated parts ourselves, and we try to create merchandise that buyers love to make use of or expertise. We’re trying ahead to creating a really robust mental property and Make in India and Analysis in India are themes that we drive ourselves on.
Ola Electrical inventory has risen from Rs 83 to Rs 89. What are the commitments for the following three years?
Bhavesh Agarwal: My solely dedication to those that have purchased and those that will purchase is that we as an organization and myself as an enabler are absolutely dedicated to constructing this future in India and making India a world hub for electrical automobiles, we’re dedicated to creating this future.
There shall be varied challenges encountered. We’ll all the time do our greatest. We’ll all the time be clear with everybody, we rely on the help and needs of all our traders, and we look ahead to doing our half to assist them create wealth.
Now that you simply guys are on the report, we’ll be talking twice a 12 months earlier, with 4 quarterly information, so hopefully at the very least 4 interactions a 12 months.
Bhavesh Agarwal: We focus on it every time essential.
