Ola Electric’s FY23 financials will be a positive surprise: CEO Bhavish Aggarwal

Ola Electric’s FY23 financials will be a positive surprise: CEO Bhavish Aggarwal

In a recent media roundtable, Bhavish Aggarwal, the Cofounder and Chief Executive of Ola Electric, announced that the company is expecting a substantial improvement in its financial performance for the fiscal year 2023 compared to the previous fiscal year 2022.

He stated that FY22 was primarily an investment year for the company, during which they initiated sales in January 2022. However, the true impact of these sales was not fully reflected in the financial statements for FY22.

Aggarwal mentioned that FY23 has been a robust year in terms of revenue generation for Ola Electric. The company has witnessed a significant increase in its bottom line, indicating improved profitability. Although he did not provide specific forecasts for the current fiscal year, he expressed confidence that the financial numbers for FY23 would be a positive surprise.

It appears that Ola Electric is attributing its positive outlook to the fact that FY23 will be the first full year during which the sales volume of the company’s electric vehicles will be accurately represented in its financial records. This suggests that the revenue and profitability for FY23 will more accurately depict the actual performance of the company in the electric vehicle market.

Overall, Bhavish Aggarwal’s comments indicate that Ola Electric is expecting a strong financial performance in FY23 due to the increased sales volume and improved bottom line resulting from its investment efforts in the preceding year.

Despite the optimistic outlook for the upcoming fiscal year, Ola Electric’s financial performance for FY22 indicates some significant challenges the company faced during that period.

The company’s losses widened by approximately 293 percent, reaching Rs 784 crore in FY22 compared to a loss of Rs 199 crore in the previous fiscal year. This substantial increase in losses can be attributed to a surge in expenses, which rose to Rs 1,240 crore, reflecting a YoY increase of around 306 percent.

Ola Electric’s decision to start selling its scooters in early January 2022 seems to have played a role in the dip in its bottom line for FY22. Bhavish Aggarwal, the Cofounder and Chief Executive of the company, indicated that FY22 was considered an investment year, during which they incurred significant costs associated with ramping up sales and operations, thereby impacting profitability.

On the revenue side, Ola Electric reported consolidated revenue from operations of Rs 373 crore for FY22. This marked an impressive growth of nearly 400 times compared to the revenue of Rs 0.86 crore reported in the previous financial year. The significant increase in revenue can be attributed to the fact that the company began selling its two-wheelers in December 2021, which contributed to its revenue for FY22.

In summary, while Ola Electric faced widening losses and escalating expenses in FY22 due to its investment activities, the company also experienced a substantial surge in revenue as a result of the commencement of its scooter sales. These financial figures suggest that the impact of Ola Electric’s sales efforts and operational expansion was notable, even though it came with increased short-term costs. The company’s management anticipates a positive turnaround in FY23 as they transition from an investment phase to a phase where the true sales volume will be more accurately reflected in their financial statements.

During the ‘Customer Day’ event held at the Ola Future Factory in Krishnagiri, Tamil Nadu on August 15, Bhavish Aggarwal, the Cofounder and Chief Executive of Ola Electric, emphasized the company’s strong financial position and the continued support from its investors to realize its vision. Aggarwal stated that the company possesses a robust balance sheet and is backed by investors who are dedicated to supporting its long-term goals. He also highlighted the company’s financial capability to invest in the development of future products.

The event served as a platform for Ola Electric to announce the introduction of new versions of its electric scooters. The new models are named Ola S1 X and Ola S1X+. In contrast to the previous versions, the Ola S1 Pro and Ola S1 Air, which are priced between Rs 1,20,000 and Rs 1,40,000, the Ola S1X Plus is set at a price point of Rs 1,09,999. Deliveries for the Ola S1X Plus are scheduled to commence in September.

The Ola S1X is priced at Rs 99,999, and customers can start making reservations for this model from August 15. Deliveries for the Ola S1X are anticipated to start in December.

Overall, Bhavish Aggarwal’s statements at the event underscore the company’s confidence in its financial stability and the strategic backing of its investors. The launch of new scooter models at varying price points further reflects Ola Electric’s commitment to expanding its product lineup and catering to a wider range of customers in the electric vehicle market.

Bhavish Aggarwal, during the event, expressed confidence in Ola Electric’s financial performance for FY23 and indicated that both the company’s top-line (revenue) and bottom-line (profit) are expected to show significant improvements. These positive developments are in line with the company’s preparations to eventually go public through an Initial Public Offering (IPO). While Aggarwal didn’t provide a specific timeline for the IPO, he reiterated the supportive stance of the company’s investors, highlighting their continued backing of Ola Electric’s growth journey.

Aggarwal also highlighted the correlation between the scaling up of manufacturing operations and the simultaneous improvement of the company’s financial indicators. As the company’s top-line (revenue) expands due to increased sales and production, he suggested that this growth would lead to an improvement in the bottom-line (profitability).

It was previously reported that Ola Electric is planning to enter the IPO market in 2024. The company has enlisted investment banks Kotak Mahindra Capital and Goldman Sachs to assist with its IPO preparations, as per information from sources.

Overall, Bhavish Aggarwal’s statements indicate Ola Electric’s positive outlook for its financial performance, its commitment to the IPO plans, and the potential for synchronized growth across various financial metrics as the company continues to scale its operations and product offerings.

Ola Electric, with its current manufacturing capacity of 1 million electric vehicles per year in Krishnagiri, Tamil Nadu, is gearing up to double its production capacity. Bhavish Aggarwal stated that within the next six to nine months, the company’s manufacturing capacity will increase from 1 million to 2 million electric vehicles per year. Aggarwal further revealed the company’s ambitious long-term plan to ultimately expand its capacity up to 10 million electric vehicles per year.

Additionally, Ola Electric is venturing into the motorcycle segment and plans to manufacture motorcycles within the same manufacturing facility. The company has also established a dedicated battery manufacturing unit, which is currently engaged in developing India’s first indigenous lithium-ion cells. Aggarwal mentioned that the company is in the process of creating 5 GWh (gigawatt-hours) of cell capacity in the initial phase, with plans for gradual expansion in the future.

During the launch event of the new bike models, Ola Electric demonstrated a prototype of a functional lithium-ion cell, showcasing its progress in battery technology.

Aggarwal emphasized the importance of securing resources for manufacturing lithium-ion cells in India. He outlined the company’s strategy to initially utilize the cells for its own manufacturing needs and eventually offer them to other businesses as well.

Ola Electric’s plans for capacity expansion, diversification into the motorcycle segment, and efforts in developing indigenous battery technology underscore the company’s commitment to the electric vehicle market in India. The ambitious growth plans align with the broader industry trend of transitioning toward sustainable transportation and localizing manufacturing capabilities.