OLA Electric's persistent challenges emphasize capacity gaps

Copyright © HT Digital Streams Limit all rights reserved. Ola Electric is the most important business of Bhish Aggarwal, and it faces several challenges. (Lying Photo: Reuters) Summary Ola Electric showed ambition in the introduction and distribution networks of the product, but faces operational, regulatory and reputation challenges. Since Bhishavish founded Aggarwal Ola Electric Mobility, he has insisted on leadership in electric two -wheelers through visible large, aggressive expansion and disruptive prices. This approach gained a $ 4 billion valuation last August in its initial public offer (IPO). Things went downhill soon. The stock almost halved in value, even if the BSE Sensex rose by 3% during this period. An subjugating stock is just one of the many problems weighing on Aggarwal, Ola Electric and his other big business, which is in the taxijn. Earlier this month, an investor in OLA’s taxi businesses valued the private company at $ 1.25 billion, by 83% lower than $ 7.3 billion in 2021. In an ICRA report this month pointed out that Bajaj and TVS had a joint share of 40% this fiscal, compared to only 7% in 2021-22. Ola Electric used its digital platforms to utilize its initial set of clients across India directly. TVs and Bajaj used the traditional showroom route to utilize their existing networks. Ola replied by printing the pedal on its physical distribution network and expanding it from 870 in March 2024 to 4,000 by December 2024. Despite this aggressive expansion, Ola lost the ground for its opponents, which raises concerns about his way to profitability. Margin Woes Ola Electric has not yet made a profit. For the first nine months of 2024-25, it achieved a negative operating margin of (-) 26.7%, compared to (-) 22.7% in the previous year. On average, it has lost £ 425 a quarter over the past seven quarters. In the latest December quarter, it delivered a net loss of £ 564 on a 19% drop in turnover due to lower-than-expected sales volumes. According to ICRA, this led to a longer -than -expected period of cash burning and stretched its way to profitability. It warned that Ola may have to raise funds over the next 12-24 months. Much depends on monthly sales. In his fourth quarter earnings call, Aggarwal said the break-even point at an operating level was at a monthly sales of about 50,000. “Now, when we get there, it depends on the market conditions as well as the invasion of the EV,” he said, adding that it could be in the next few quarters. Also read: ICRA downgrades Ola Electric Technologies as internal challenges for sales, while Aggarwal has set up sales growth growth as a broader market issue, Ola Electric itself has an operational, regulatory and reputation challenges. Operationally, it struggled with the quality of the product and service problems after sales. Last October, the Central Consumer Protection Authority issued a notice on the cause after receiving more than 10,000 complaints from customers since 2023. In January, capital market regulator Ola warned for the announcement of expansion plans on social media before informing the stock exchanges. More harmful, Ola said it sold 25,000 vehicles in February, while Vahan’s registrations showed about 8,600. Ola often strikes the wrong reasons on the news, and erodes customer confidence. According to Google Trends, the interest in OLA outside the IPO was the highest in October 2024, after comedian Kunal Kamra hit the company for its service quality. It bumped again for mixed reasons in November – Ola fired 500 employees that month and launched the most affordable scooter, Ola Gig, at £ 39,000. Big Picture Ola expects mass market products like Ola Gig to help win the market share, while premium products improve the margins. In his latest earnings call, Aggarwal said a wide product range of entry-level action to premium scooters and roadster motorcycles were from the three pillars of the company’s strategy. In the last two quarters, however, the increase in mass models is more than counteracted by a decrease in premium models. The other two pillars identified by OLA reinforce its distribution network and do more things in the home, including cell manufacturing plant and software work. However, investors are concerned about Ola’s ability to deduct it. Meanwhile, Ola faced another round of reputation damage when Maharashtra ordered local authorities last month to close 121 OLA stores because they work without trading certificates. Can Ola keep it on the road that it mapped for itself? www.howindialives.com is a database and search engine for public data captures all corporate news and updates on live mint. Download the Mint News app to get daily market updates and live business news. More Topics #wone Factors #In Maps Mint Specials