47.5% attrition in FY23, CEO to sell 4.7 cr shares, and more: Five things about Ola Electric's Rs 5,500-crore IPO

Electric two-wheeler company Ola Electric, led by Bhavish Aggarwal, on Friday filed preliminary papers with markets regulator Sebi to raise funds through an initial public offering (IPO) and a lot of things could be gleaned about the company from the Draft Red Herring Prospectus (DRHP).

1) 47% attrition: Ola Electric said its employee attrition was 47% in FY23, which effectively means the firm will have to rebuild the organisation nearly every two years. "Our employee attrition rate was 42.06% and 47.48% in the seven-month period ended October 31, 2023 (on an annualised basis) and fiscal 2023, respectively. We also employ personnel on a contractual basis, including in our experience centres, and we cannot assure you that we will be able to recruit qualified and absolutely trained personnel to meet the growing demands of our business," said the company in its IPO papers filed with Securities and Exchange Board of India.

2) CEO to sell 4.7 cr shares: The proposed IPO is a fresh issue of equity shares up to Rs 5,500 crore and an offer for sale (OFS) of 9.52 crore equity shares by promoters and investors, according to the DRHP. The offering, which is the first by an EV-maker in the country, will include an issue of fresh stock, with CEO Bhavish Aggarwal and SoftBank selling up to 4.74 crore and 2.39 crore shares, respectively, according to a draft prospectus.

3) How will Ola invest its IPO funds: The proceeds from the fresh issue will be used for capital expenditure to be incurred by the subsidiary, OCT, for the Ola Gigafactory project, repayment or pre-payment, in full or part, of the indebtedness incurred by subsidiary, OET, investment into research and product development, expenditure to be incurred for organic growth initiatives  and general corporate purposes. The company is in the process of building an EV hub in the Krishnagiri and Dharmapuri districts in Tamil Nadu, India, which includes the Ola Futurefactory, the upcoming Ola Gigafactory, and co-located suppliers in Krishnagiri district. It introduced its first EV model ‘S1 Pro' in August 2021 and currently has a portfolio of 5 scooter models.

4) How loss-making is Ola?: For the fiscal year 2023, revenue from operations increased more than seven times to Rs 2,630.93 crore against Rs 373.42 crore a year ago. For the three months ended June 30, 2023, revenue from operations stood at Rs 1,242.75 crore. In FY23, the company posted net loss of Rs 1,472 crore as against Rs 784 crore a year ago. 

5) 31% share in electric scooter segment: As of the three months ended June 2023, Ola has an E2W market share of 31 per cent and aims to explore exporting EVs to specific international markets in the future. It sold more than 4 lakh vehicles in 2 years. Earlier this month, Ola Electric slashed its sales goals for 2023-2025 by more than half and delayed its target of achieving profits by a year, after reduced government incentives pushed up e-scooter prices.