Hi, everyone. Good day and welcome to Ola Electric Q4 and FY 2026 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 opening remarks conclude. Please note that this conference is being recorded. Before 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. Now, I would like to request Sri Bhavish Aggarwal, Chairman and Managing Director, and Sri Deepak Rastogi, CFO, Ola Electric, to begin the conference. To begin, first, I would request Deepak to start with opening remarks.
Before you start, Deepak, I just want to say welcome, everybody. An important quarter for us. I hope everybody's had the chance to read our shareholders letter. A bunch of nuances which we will cover through the Q&A, and definitely something, 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. Deepak, you make your remarks, and then I'll add wherever I want.
Thank you so much, Bhavish. Good evening, everyone, and thank you for joining us. Financial year 2026 was a year in which volumes were lower than where we wanted to be, it was also a year in which the fundamentals of Ola Electric became materially stronger. We exited the year with industry-leading gross margins at 38.5%, a much lower cost base, sharply improved execution metrics, better product quality, our first operating cash flow positive quarter at a Gigafactory which is now entering a scale-up. This progress comes at an important 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. Ola is building across both shifts, electric mobility, cell manufacturing, and energy storage on an integrated platform.
Let me first start with the margins. In Q4 for 2024 to 2025, 2026, 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%. 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, Gen 3 maturity, pricing architecture, downstream control, and increasing integration of our own cells.
On this point, Deepak, I'll just pause you. I think gross margins has been definitely one of the things we've been highlighting quarter -on -quarter for the last many quarters. This actually shows the success of our vertically integrated approach on both the manufacturing supply chain as well as on the front end. Many people frequently ask us about the sustainability of these gross margins. One of the potential misconceptions is that this is because of incentives. You can see without PLI also, gross margins are fairly high. You know, I, we believe very strongly that our gross margins will remain a very strong structural advantage for us going into the future as we rebound our volumes.
We are actually now even higher, much higher than ICE industry, gross margins. If we, you know, for EV competitors to catch up with us, it's gonna take a lot of investments into technology and manufacturing, which is actually what has led to this meaningful strength. 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 pressures as well as some of this gross margin in the last month or two we've invested into aggressive growth. Still, gross margins will remain fairly healthy for us in the short term also. In the long term, we can actually expect even more incrementally higher gross margins as we go on.
Thank you, Bhavish. For financial year 2026, consolidated revenue stood at INR 2,253 crore with 173,794 deliveries. Consolidated gross margin improved to 30.6%. While volumes were impacted through the year, the improvement in margin shows the underlying strength of our product economics and operating model. I would now actually, you know, highlight the cash flows, which this is the first time we actually have positive cash flows. I'll just talk about it, and then I'll ask Bhavish to obviously add his comments. Q4 was the first operating cash flow positive quarter. Consolidated CFO was INR 91 crore, supported by strong gross margins, PLI inflows, lower OpEx, and tighter working capital discipline. The auto business delivered INR 213 crore of CFO and INR 173 crore of free cash flow in Q4. This is an important milestone as Ola moved from a heavy build-out phase to a disciplined scale-up.
Oh, I think, Deepak, you covered. I think the only point I will accentuate here is that, you know, Q4 revenues were low because deliveries were low. But our gross margin leadership as well as our OpEx reduction, both have actually now hit a growth stride. 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. We are further saying that in the next couple of quarters, we'll actually get our OpEx down to about INR 100-120 crores a month, so further down while business rebounds.
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%+ of our OpEx is actually fixed. That means operating leverage is very high. As we have reduced our operating costs through efficiencies, and as now we are rebounding sales, a lot of it is translating into net margin for us. This is specifically seen in the auto business. 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 higher in this rebound period, we will generate meaningful, sustained free cash flow. Cell is still in investment phase, but that also through this financial year will get into sustained revenue growth and over time cash flow generation. If you see annually also compare our auto segment FY 2025 versus FY 2026 on page 15. You can see how our CFO has actually meaningfully improved over this period. For our auto business, there is no more CapEx needed as we scale up. 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.
You know, this, what we are also seeing in the market now is demand for EVs has actually gone up meaningfully in the last few weeks. While other competitors will need to do more CapEx, as well as new product rollouts, we have our capacity on both automotive and Gigafactory covered because all the CapEx is now behind us. We can easily scale up to a million units a year. We are focused and somewhere 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.
Our inventory, free inventory days is actually down to three, four days. We have order backlog now. The company is highly focused on ramping up the supply chain quickly enough so that we can fulfill these orders. The backlog also. I actually expect as we fulfill, improve our delivery timelines, volumes will go up another 10%-20% in the near term. Very, very good signals from the demand growth in the market for EVs, and we are well positioned to capture it without any incremental capital required.
Thank you, Bhavish. The third highlight, you know, which Bhavish also touched upon is on the OpEx cost reset. Consolidated OpEx, including lease expenses, have meaningfully reduced from INR 844 crore in Q4 2024/2025, which is last year, to INR 428 crore during this Q4 2025/2026. This reflects network rationalization, tighter sales and service costs, lower fixed overheads, and stronger operating governance. We expect OpEx to move towards approximately INR 350 crore. We actually spoke about in our last shareholders letter also, over the next couple of quarters as the full benefit of 26 actions flow through.
A 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, you can see how as we have improved service, the first chart on page six, our service backlogs as they have gone down, our sales has rebounded almost in a V-shaped recovery. The chart below that shows you week on week how our registration numbers are ramping up. 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. The recovery in market share is fairly broad-based. Yeah, back to you, Deepak.
Yeah. This reset creates a stronger operating leverage. The core auto CapEx is already in place for up to one million. Bhavish just spoke about it for the auto business of annual capacity and Gigafactory Phase 1 infrastructure is in place for 6 GWh scale up. Together, the asset base can support approximately INR 15,000 crore-INR 20,000 crore of annual revenue scale across auto and cell without needing for meaningful incremental CapEx. With the reset OpEx base and current gross margin structure, adjusted operating EBITDA breakeven is achievable at around 20,000-25,000 units per month, subject to pricing mix and commodity conditions.
I want to just underline this. I know many of people on the street investors have asked us the question on the breakeven. You know, if you do the rough math and all the financials here that we talk about right now are consolidated. You know, in the past, segment financials have created some level of confusion. Today, we are just giving the communication on a consolidated financials breakeven. If you see our gross margins of around 35%+, 38% in this quarter, ARPU or average ASP is about INR 1.4 lakhs or so, thereabout. INR 50,000 gross profit per vehicle and OPEX, console OPEX cost, including lease rentals, about INR 300 crore-INR 350 crore in the next quarter or so.
The breakeven adjusted EBITDA breakeven console comes to about 20,000-25,000 vehicle units a month. In our rebound already, we are seeing a scatter. You saw March, April registration numbers. May also, I'm sure most of you are tracking. Another thing we've added in this sheet for everybody now is we are also going to show deliveries, as well as registrations, as well as orders. The auto industry, the street tracks wholesale and retail typically. For us, those are very different. We don't have a dealer model, so there's no wholesale retail concept. 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.
Because of our unique D2C business model, these three metrics also we will publish for future clarity. Another point I want to add here is on page eight, you see how while this period had service 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 unparalleled in the EV two-wheeler industry. You can see here a very reputed third-party survey on brand strength. Our brand recall is industry leading, and our NPS is also above industry averages. Specifically, NPS where there are no service delays is actually very healthy.
We remain very confident about the customer thinking and the customer sentiment on our business. That's why we are seeing volumes ramp up quickly as we are as we have now largely solved service and as we are now ramping up our manufacturing and backend, the demand is growing along with it. We also have put there on page nine a chart of Google searches. It's just it's the Google Trends dashboard itself. You can see Ola is by far the highest searched brand in the EV space in India. All these are advantages and, you know, our business model does not have any spends on marketing, et c. That also benefits when we think of operating costs.
Thank you. Execution improvement, which, you know, Bhavish just talk about, I'll just add some more flavor to that. Exe cution improved meaningfully through the year. Product quality is improving with Gen 3, with warranty. Cost is 70% lower than Gen 2. Service metrics have also improved sharply, with service TAT down 88%, same-day closures at approximately 87% and part pendency down 69%. Execution improves, sales has started responding. April registrations were up 20% month-on-month, while the broader e-two-wheeler industry declined by more than 22%.
On warranty, Deepak, I would like to highlight for the team, for everybody on the call here on page six of the shareholders letter, in the second paragraph. You can see how year-on-year our warranty costs have actually come down such as in a very material way. You know, in FY 2025, we had a INR 500 + crore of warranty cost. In FY 2026, it's only INR 60 crore. INR 59 crore to be accurate. 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 warranty costs in FY 2026.
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. Looking ahead, we feel very optimistic about our sales as well as customer sentiment.
Looking ahead to Q1 2027, we expect 40,000-45,000 orders and consolidated revenue of INR 500 crore-INR 550 crore, nearly double of the Q4 level. As volumes recover, we expect the auto business to move towards adjusted operating EBITDA and cash flow positivity through financial year 2027. You know, there are a lot of questions on the bike, Bhavish.
Uh...
I wanted to make sure that, you know, we actually address this-
Yeah.
... as part of our narration.
Let me give the headline here, Deepak.
Yes.
You know, we launched the bike about a year ago, and we've been very consistent about our communication in the earnings calls that we are scaling it step by step. Now we are very, very happy to say actually that we are seeing good traction both on the EV bike industry. Bike industry itself in the last six months or so has more than tripled. Of a very small base right now, but the trend is very aggressively growing. You know, think of it as where EV scooters were five years ago before Ola really entered the market in a big way and scaled it up. Bikes are also there, our market share in bikes is 50% +. Bikes are a little different than scooters in terms of product.
The customer expects more range in the bikes, that's why our bike portfolio has a slightly higher range than scooters for the customers. Specifically at the top end, actually, only because of our own Bharat Cell, the 4680 cell, we can offer almost a 500 km certified range product. There's very strong interest in the bike in customers. Again, we are constrained not by demand there, but by supply. We are seeing significant uptick in the Roadster product in the northern belt of India, which is the heartland of the bike market of India.
I actually feel 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 take best advantage of that.
Roadster is becoming our second auto growth engine. Motorcycles are India's largest two-wheeler category, and EV penetration remains very low. Ola now has 50% market share in electric motorcycles, and bikes contributed 15% of April gross orders. With products going up to 9.1 kWh battery capacity and 500+ km certified range, Roadster is built around the core motorcycle customer needs of range, performance, and reliability. The Gigafactory is now entering the scale phase.
Oh.
We currently have 2.5 GWh operational capacity. Installation up to 6 GWh is largely complete, with commercialization expected to be completed by the end of this quarter.
I think, Deepak, before we go into operational updates.
Yes.
[speaker 1] macro commentary important. 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. It's very clear from both customer sentiment as well as government sentiment that [EV go encourage current]. All of you have seen how EV policy. Today there was some media articles that for buses, etc , there will be incentives, et c. EV encouragement is from a government as well as consumer side going up. Also along with EV growth, two other things are happening. One is the clarity in the policy stakeholders is very clear that we will have to very quickly accelerate domestication of the battery supply chain. Your company there is the best positioned to do that.
In the power grid itself, it's very clear that, you know, our solar rollout has kind of maxed out unless we start deploying batteries along with it. That's why you can see already some announcement on floating solar along with batteries. The government sentiment as well as policy sentiment, whatever we read from media, seems like there will be more, just like ALMM in solar, there will be ALBM, ALCM. There will be hopefully some extension in the ACC PLI. There will be domestic procurement for BESS deployments mandates coming soon. Our battery business is actually right in the center of that 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 create and productionize and scale up the Gigafactory and get commercially viable yields and prices. You know, we have 6 GWh already installed. 6 GWh. 2.5 GWh was already done. The remaining 3.5 GWh is getting done this quarter. It was supposed to be done a month back, due to the Iran war, some containers got delayed. It's getting done in June. We are actually going to be expanding that 6 GWh - 20 GWh by next year, only by raising capital separately at the cell entity.
Which also we have a lot of inbound interest from private equity players, given the leadership of this asset that we have created. So that's, you know, I just want to underline this important point on the macro side that our company is very well positioned to really leverage the tide and really come, you know, create this energy security stack for our country in a meaningful way and monetize it.
Yeah.
There is some commentary here on our technology. you know, we will probably skip that in our commentary. Another point I want to make in our Gigafactory business is that we have actually Deepak gave you quick operating metrics. You can find that in page 12 and 13 also. Now we are focused on ramping up production to get revenue in the Gigafactory. There are three engines of revenue built in this. If you go to page 13, you will see the chart there. We have our cells, the 46-series is already out there. We are also working on a prismatic cell, which will be out soon. We haven't yet released details of that. There are 3 revenue engines now. First is mobility, which is EVs.
Obviously, our captive demand will eat up about 1.5 GWh -2 GWh by the end of this financial year. We are also now in conversations with external companies, Indian and global, who want to buy our own cells, given that they are world-class and industry-leading specs. The second demand engine, which is already built, is Shakti. Shakti, we had launched last quarter, and we have already delivered some to customers. We are constrained by supply of our cells because we are prioritizing our own auto business moving to our cells in general over Shakti production. As Gigafactory ramps up through the next few months, Shakti will also meaningfully ramp up.
There we have a very strong demand from both retail as well as B2B customers, telecom towers, petrol stations, dark stores, 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. This product is called Mahashakti, which is bigger Shakti, more energy. Mahashakti, it'll be built on our prismatic LFP platform. We are right now in product development. We have had conversations with many platforms there. We have shared specs. People are excited about our product there. More details will follow through the next couple of quarters.
Okay. I just wanted to, you know, emphasize that, you know, around 15% of the orders are already on our product using Bharat Cell.
Yeah.
We plan to transition the full vehicle portfolio to our own cells by September 2020.
Yeah. I think I would underline that, Deepak. This is a meaningful transition. Already 15% on our own 46 80 cells in the market. Very good feedback from customers. By end of next quarter, we plan to transition everything. It's a meaningful ramp-up of our Gigafactory happening as we speak.
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 Shakti and Mahashakti. Our financial year 2026/2027 priorities are clear: recover volumes, hold margin leadership, reduce OpEx
Ramp up the Gigafactory, improve auto cash generation, and scale Shakti and Mahashakti. Thank you so much. Now I will open the floor for question and answers to the participants.
Thank you, Bhavish and Deepak. Now we'll begin the question and answer session. Anyone who wishes to ask a question may use the Raise Hand option. If you wish to remove yourself from the question queue, you may press the Raise Hand option once again. Participants are requested to unmute themselves before asking the questions. Before asking the question, we request you to introduce yourself with your full name and your organization. Now we'll wait for a moment while the question queue assembles, and then we'll begin with the Q&A. Thank you, everyone. We'll take the first question from Mr. Meet Doshi from WhiteOak Capital. Please unmute yourself and ask the question.
Hello. Hello, team. Am I audible?
Yes, you are.
Thank you for giving me the opportunity to ask the question. First of all, many congratulations to have a good numbers in terms of margin. Just I want to know that, are we planning? In last quarter you told that in Q4 we are going to have a good revenue, but still it is not reflecting. Your team has given the data at the end of March, you have a very good number of sales. Why it is not reflecting in terms of the number? That is my question.
Okay. Meet, I don't know what exactly you're referring to, but speaker, our registrations are public data, right? March [10,000], April [[12,000], and May is trending towards, you know, 14,000-15,000. We are growing volumes, registrations. Our orders are growing ahead of registrations, but like I said, we have a production backlog now. Some of that will come through in this quarter in terms of registrations. In terms of revenue, see, Q4 was a lower revenue because Q4 was also, like we said, a quarter where we focused a lot on our operations to fix the operations and then scale again, both on cost as well as customer experience. We started scaling the volumes again in the middle of March onwards.
You know, the good thing about our business is volumes...
Thank you, Bhavish. Sir, with the regards of follow-up question, just I want to know that are we still focusing on electric two-wheeler and like how you are thinking to main focus, like for the new products of Shakti and that kind of UPS systems or two-wheeler will still remain in the focus for the business?
Our company has two segments, two business segments, right? Two-wheeler is the core business because that is generates 100% revenue today. Our Gigafactory was also always built with the vision of building cells and ESS battery energy solutions, storage solutions, right? The Shakti product is already built. It has actually a lot of carryover and platform from the two-wheeler platform. In that sense, very low cost of CapEx and R&D to build the Shakti product. We will be ramping that up over the next couple of quarters. Like I said, our priority is to make our own cells go into our automotive business first, and then as the Gigafactory ramp becomes beyond our automotive requirement, then we start scaling up Shakti next.
Demand for Shakti also is very high, given that, you know, battery storage is a very, very fast growing thing.
Okay. Thank you, Bhavish. Last time Thank you so much.
Thank you, Meet.
All the best. All the best, sir. Thank you so much.
Thank you.
Thank you, Mr. Doshi. We'll take the next question from Mr. Arvind Sharma of Citi. Please unmute yourself and ask the question.
Hi, sir. Good evening. I hope you can hear me.
Yes, we can. Hi, Arvind. Hi.
Hi. Hi, Bhavish. Hi, good evening. Thank you for taking my question. On the demand front, since you said a break-even around 20,000 a month, what is a bridge from the current levels to that? Is it driven by motorcycles or driven more by service? What would be the key drivers for the volumes? That would be the first question.
Arvind, firstly, we are still in our rebound phase in terms of volumes, because what volumes in Q4 were not our steady state volumes. It was impacted by our internal operations. You've seen the recovery since that, now it's the third month of recovery. We are actually not just recovering, we are growing month-on-month on top of that rebound, right? I believe another couple of months, most likely June, July also, we will see a continuing rebound of our volumes. The rebound itself should get us to about 17,000-18,000 units a month. Right now, that will be a mix of both scooter and bike. 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, the factory anyways has capacity, so we don't need to do CapEx. As we are ramping up our suppliers, as our suppliers are getting production, scaling up again for us, demand is also, you know, ramping up. I do expect just better, you know, stability on service and improved inventory availability will lead us to closer to the INR 20,000-INR 22,000 number over the course of next quarter.
Got it. Thank you. 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? Would it increase further when you move to 6 GWh ?
Good question, Arvind. Actually, if all of you know that lithium has entered an upcycle in the industry. Our advantage of our own sales has actually improved. 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 BOM cost is concerned. Obviously, the overheads on the Gigafactory right now are, with more scale will get factored in. On this pure BOM cost alone, it is cheaper for us to build versus import. That's at these low volumes.
I do expect as we scale up our Gigafactory towards the 6 GWh over the course of this year, we will get a 10%-15% advantage on building our own cell, including the operational overhead of the Gigafactories. You know, the advantages of making in India are actually coming out to be very true in the already in our business model.
Got it. Thank you so much for answering the question. That's all from my side. Thanks so much.
Thank you. We'll take the next question from Mr. Venkatesh of Kotak Mahindra. You may unmute yourself and ask your question.
Okay. Now it's Venkatesh for Bhavish Aggarwal. Sir, you said you will be scaling up to 6 GWh , wherein we see there is a demand. Talk about this.
Venkatesh, we didn't hear you clearly. It got garbled up. Can you please repeat your question? Or if you're not clear, you can even type it in the chat box. Oh, there's no chat box. You can please repeat your question.
Could you please repeat your question?
Yeah. sir, what I said is when you know, battery, segment, when you-
Okay. I think we'll move on to the next question, which is from Mr. [Amod Khanolkar] of [CRISIL]. Please unmute yourself and ask a question.
Yeah, hi. Congratulations on the margin expansion, Bhavish. My question is twofold. One, is the battery capacity currently that you have and currently that is operational, is it now 100% being consumed in the scooter segment itself and you do not have anything for Shakti? That was my first question. Second is about marketing and advertising. Any specific reason as to you do not advertise big time in the print media? Thanks. These are the two questions.
Okay, Amod, I'll answer the second one first. As a philosophy, we believe that our product speaks for itself. All along in our journey, we have been able to succeed with that philosophy. As a result, our costs are also controlled. It's not like we have anything against print media. We don't even do TV, actually. You will not see us sponsor any IPL team or any boardings or anything. Because our product is so far ahead of competitor products, it delivers great word of mouth. Now 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 some service challenges in the past. We might do something. As of now, we don't see the need to do anything immediately. On your first question, I think the 6 GWh out of this, you know, roughly the rule of thumb, you can assume three is already commissioned, three is getting commissioned by end of next month. The three that is commissioned already is in a ramp-up phase. 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.
Yeah.
The gigawatt hour that we have already commissioned is in a ramp-up phase with good yields. 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. As our whole supply chain is ramping up, we are increasing our productivity and our output of the Gigafactory. By end of next quarter, which is September, we expect our Gigafactory to be producing about 2+ GWh already. For the whole year, the allocation of capacity is 2 GWh to our in-house business. Maybe 1+ GWh to external auto sales. The remaining is focused on Shakti and Mahashakti.
Yeah. Thanks for that. One last quick question. In terms of monetizing, if you may want to call it that way, the cell business. I mean, there were media articles in between that about INR 2,000 crore monetization and money should flow into the company and so on. I understand you cannot speak much about it unless you make a public disclosure on that. Are things moving on that direction?
Amod Khanolkar, I can't share too much, but, you know, we have a lot of interest from people on that front. 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.
Yes.
That space is going to expand fast, and we will be absolutely focused on leading that space, being the largest in capacity and revenue. For that, we will have to expand beyond 6 GWh . We will do that when we raise capital in the subsidiary, and that will be in due course. You know, we will let you know.
Great, Bhavish. Thanks a lot. Congrats on the increasing delivery numbers. Best luck.
Thank you.
Thank you. We'll take the next question from Apurva Desai of Kotak. Please unmute yourself and ask the question.
Hi, Bhavish. Two quick questions from me, okay? The first question is in regards to the ASP calculation that you have given, okay? What you've mentioned is that there's a one-time change in the revenue-
Yes.
Rrecognition policy.
Yes.
Could you maybe elaborate on that?
Yeah. Apurva, what we did was, we sell some, let's call it, care packages or extended warranty packages, which is, let's say three-year product, five-year product. We were recognizing the revenue upfront. This time, with our auditors, we decided that we will not recognize it upfront. That's about a INR 20 crore-INR 30 crore hit in this quarter. Is that correct, Punit?
Yes. Yes, Bhavish.
Yeah. I'm not a financial expert, but this is what it is. Hence, you see the ASP has come down, actually that revenue will come every quarter, right? We have already done the sale.
Okay. This was more of a one-time thing. Is that correct?
It'll be a one-time correction. Every quarter now you will see this revised approach.
Okay.
Yeah.
Would that be the case for the earlier quarters as well? Would the numbers be revised or, would that not be the case?
No. Maybe Deepak, you can answer.
No. you know, whatever here was the impact, you know, we've already baked in already in these numbers.
Right.
Hence, you know, there is no one-time effect which you would see. It will be already baked in the numbers. Whatever numbers we publish will continue with the same numbers.
Okay. Okay, coming to my second question, okay? It's regarding the Gigafactory. From what your shareholders report told, I understand that you want to ramp it up to 20 GWh . I want to understand two things, okay? First, I want to understand the rationale behind, you know, going for a ramp up pretty quickly. 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.
Sure, Apurva. 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? We will first consume the, you know, grow into the 6 GWh capacity. The industry demand in India is growing faster. 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 capacities into the prismatic cell capacity, but only when we raise capital at a subsidiary level, and that is in our plans for this financially. Sure.
All right. We'll take the next question from Mr. Vipul Agrawal of HSBC. Please unmute yourself and ask the question.
Hi, Vipul. Good to see you.
Yeah. Hi. Bye, Bhavish. Thank you for taking my question. Particularly three questions. First is you talked about lower CapEx. Like, what will be, now, how we should we see the total CapEx for next two to three years perspective? Like, we see that you already have one million capacity in vehicle, and I guess you will be having just couple quarters remaining-
Yeah.
For the CapEx in battery plant.
Yes.
How should we see your CapEx in next two to three years?
Good question. Vipul, in auto, we, on an annual basis, you should expect very incremental CapEx. Maybe, INR 50 odd crore, that's about it. Just maintenance CapEx, because we have very large capacity already built out. That means the conversion of EBITDA to free cash flow will be fairly high. On cell business also, like I said, we have done all the CapEx for 6 GWh. 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 capital into the cell company separately. From that sense, actually, the business' CapEx cycle is behind it, and now focus is on scaling up utilization and monetization.
If it is possible to quantify, like, what kind of outflow we are looking in FY 2027, and what kind of maintenance CapEx we are looking in FY 2028, if possible, if you can quantify?
Vipul, again, rule of thumb 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. In terms of PPE CapEx, that'll be below INR 50 crore a year.
Okay, yeah, my coming next question is on our, was on R&D only. How should we like you are largely done with your product development as well, and your Gen 3 is also doing pretty well. How should we see the R&D expense as well in coming years?
See, Vipul Agrawal, we are a technology company, 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 in-house. You can see how that has played out in terms of gross margin, product proposition, all of that stuff. We will continue to invest in R&D across both auto as well as cell business. It'll be, you know Right now, obviously as a percentage of revenue it is high because revenue was subdued in Q4. Generally, it should be in the mid-single digits of revenue going ahead as revenue ramps up.
That makes sense. Thank you. My second question is on the cash position right now. Basically, like since you talked about like lower CapEx right now and your OpExes are pretty low. Are we looking at any major cash burn in FY 2027, or should be likely maybe like at par? How should we look at that part of the business?
Yeah. See, we have on 31st March, we had about INR 1,550 crore, INR 1,600 crore of gross cash and about INR 2,500 crore of debt. We had a net debt of about INR 950 odd crore. We don't expect any. There will be about INR 300 crore-INR 500 crore of operating cash flow burn over the course of this year as the volumes go up. It could be lower if volumes rise faster. Generally, operating cash burn, like I said, after 20,000-25,000 orders a month will be positive. We'll be making operating cash flow. On free cash flow, just CapEx is minimal going forward. We do have some debt servicing and debt repayments coming up.
I think through this year we'll have about INR 400 + crore of debt repayments. We might also choose to accelerate some because right now our cost of debt is slightly higher.
Thank you. That was a pretty detailed answer. Just last one on a qualitative aspect of the business. Like, what we have seen in last three years, when you started your new stores, the store experience was pretty very good.
Eventually deteriorated. What we are seeing right now, it has improved, but again, not to the extent what we have seen.
Yes.
Two years back. Maybe if you can talk a bit on your store strategies. Like, do you plan to get new dealers or maybe it will be like company-owned, company-driven. How do you plan to improve that the whole experience for the customers?
Vipul, our experience has improved, by, you know, from, let's say two quarters or one quarter ago. We expect in the next one or two quarters 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, et c. We are focused on improving experience. We've spent a lot of time building the right back-end processes to make front-end experience better. We don't plan to have any dealerships in our auto business. We believe our strategy is correct. We had some execution slip-ups through last year, but now the company has meaningfully overcome them.
That said, there is still some work to be done, like you correctly pointed out. The good thing is our volumes are ramping up in parallel. 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.
Yeah. Thank you for that answer. That's all from my side.
Thank you.
We'll take the next question from Mr. [Tribhuvan Singh] of [Sonalika Family Office]. Please unmute yourself and ask the question.
Hi, guys. Thank you for taking my question, and very congratulations on the solid results you guys have. I just want to understand the research and development part of Ola's battery business. Like, I read somewhere that you guys are focusing on solid-state batteries and sodium-ion batteries. How are we progressing on these long-term initiatives, I would say?
Yes. very good question. I never thought I'll be asked a technical question in an investor meet. Actually, you read it in our letter itself. On page 12, the cell technology roadmap shows you that our roadmap ladders into on the performance side, solid state, and on the cost side, sodium. We have these technologies already at a lab scale already working. We are not focused on spending a lot of capital on getting them manufacturing ready right now. Our focus is to ramp up our 46-series NMC. We have, though, brought in our LFP cell also. Through the next quarter it'll start ramping up in our factory.
We are ready as the industry matures for solid state and sodium, we will be bringing those products to market also. Sorry, is there a follow-up question or does that answer your question?
All right, we'll move to the next question from Mr. Jaineel Jhaveri of JNJ Holdings. Please unmute yourself and ask your question.
Hi, Bhavish. 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 issue seems to be with part unavailability.
I just wanted to understand that why is that happening, like, even if it is a survey, you know, Gen 1 or Gen 2 scooter.
How is it that parts are unavailable?
You caught it well, Jaineel. Firstly, some of the videos on social obviously are old videos, so they keep recirculating online due to competitive pressures. You are right, one of the challenges we did face was parts supply chain. As we had ramped up our network, because we, in a dealer model, the dealer buys the parts and the OEM distributes it through traditional distributor chains. We don't do that. We send our parts directly to our service center. Earlier we were not stocking any parts in our service center and, you know, that led to even for a brake pad replacement, the guy had to wait 10 days.
Our parts procurement from our suppliers was also after a part requirement came. Actually it led to 20, 30-day fulfillment time-wise. Now we've streamlined a lot of that. Now parts are stocked in the service center, as well as the part procurement is done based on forecasts. All of this is just execution fixes that we have done. 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. We are ramping up the supply chain so that we can fulfill part requirements better in service also.
Okay. Thanks. One question regarding BESS. Why have we selected NMC to go into BESS when we have LFP?
Also, like mostly around the world it has only been LFP. Anyone getting LFP cells from China and putting into a BESS product in India would start off much cheaper than our Shakti product. Why would you?
Janil, we haven't selected NMC. The Shakti 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 Shakti slower because we are focusing our NMC 46-series into our auto business through next quarter. We wanted to be in the market with Shakti. Many, many customers actually are okay with paying the price of Shakti with the NMC product today, so we are starting to take that business. By next quarter, Shakti will have LFP so that we can ramp it up faster.
Okay. My last question, I've noticed that there's been a slip up in terms of some products moving into, you know, future quarters or maybe even future years, like the Gen product.
Um, so what...
See what we did, Janil, yeah, I understood your question. See, we decided, and I think we made a public statement of this also, maybe in this chat, that we have a product roadmap. In our shareholders letter also you can see it somewhere in the slide pages. 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 new products. Now, as we have stabilized our front-end operations, as volumes are ramping up again, we will actually go back to some new product launches over the course of this year.
Okay. Just one last comment.
Janil, I think we will, in interest of time, we will finish.
No, no, it's a positive comment. Sorry.
Okay. I'll hold it.
Just wanted to say that there was a video from some of Gareeb Scientist or some Twitter handle.
Mm-hmm, mm-hmm.
in terms of the technology that goes into your batteries. I was very pleasantly surprised at the amount of work that you all have done.
Okay.
Just would like to say that I think you need to even show the investors maybe, you know maybe some kind of a analyst meet over there and stuff like that.
Yes.
It seems like y'all are doing the hard work, but in terms of the market, it's not coming even through analyst notes.
Yes.
So for that...
Very fair point, Janil. We are planning an analyst and investor day in our Krishnagiri factory sometime, maybe in a month. That's on our agenda. Thank you so much for seeing that technical video and appreciating it.
Thank you.
Thank you. All right. I think with this we come to the conclusion of the session here. We appreciate the time and all of your questions during the call today. Thank you so much for joining us, and we look forward to meeting you all during our next earnings conference. Thank you for joining us. You may now log out from the conference call. Good evening.