Ola Electric Mobility Ltd Management Discussions

Strategic and Operating Review

Overview: A Structural Reset with Stronger Economics

FY 2025-26 was a year of significant transition for Ola Electric Mobility Limited. The Company undertook a comprehensive reset of its operating model to address service execution, distribution productivity, operating expenditure, inventory and working-capital management. These actions were intended to establish a leaner and more accountable operating structure capable of supporting growth with improved unit economics and greater capital discipline.

Deliveries and revenue contracted materially during the year; however, the underlying economics of the business strengthened. Consolidated gross margin increased from 17.9% in FY25 to 30.6% in FY26, while gross profit declined by only 14.4% despite a 50.1% reduction in revenue. Consolidated operating expenditure declined by 33.9%, the adjusted operating EBITDA loss narrowed by 36.8%, and operating cash outflow reduced by 67.6%. In 04 FY26, consolidated gross margin reached 38.5% and the Company recorded positive consolidated cash flow from operations of Rs91 crore.

The Companys priority is now to convert this stronger operating base into sustained demand, higher asset utilisation and improved cash generation. In Automotive, the focus is on maintaining service consistency, strengthening the product portfolio, developing productive distribution and rebuilding volumes without recreating the earlier cost structure. In Cells, the focus is on commissioning and utilising the 6 GWh platform, improving manufacturing yield and quality, increasing own-Cell integration and converting identified demand opportunities into qualified commercial sales.

Economic and Industry Context

Indian economy

Indias economy remained resilient during FY 2025-26. Provisional estimates released by the Ministry of Statistics and Programme Implementation indicate real GDP growth of 7.7%, supported by growth in consumption, fixed capital formation, manufacturing and services. This macroeconomic backdrop remains supportive of long-term mobility demand, although consumer financing conditions, inflation in input costs and global geopolitical developments can affect near-term purchasing decisions and manufacturing economics.

Electric two-wheeler industry

The structural case for electric two-wheelers continues to be supported by lower running costs, improving product capability, increasing consumer awareness and policy support for domestic manufacturing. The competitive environment, however, intensified during FY26 as established and new manufacturers expanded their portfolios, pricing activity increased and customers placed greater emphasis on reliability, financing and access to service.

The industrys next stage is likely to be defined less by initial product availability and more by the quality of execution across the full ownership cycle. Product economics, battery performance, financing, fulfilment, service accessibility, warranty experience and resale confidence will influence adoption. For manufacturers, this requires balancing market development with margin, working capital and service readiness rather than pursuing volume in isolation.

Public policy is also shifting the industry toward deeper localisation. Demand-side support remains relevant, while production-linked incentives for Automotive components and Advanced Chemistry Cells encourage domestic technology, manufacturing and value addition. Olas vertically integrated model is aligned with this direction, but the commercial benefits depend on reliable production, competitive cost, compliance and sustained customer demand.

Business Overview and Operating Transition

Business Overview and FY26 Operating Transition

Ola operates across two connected businesses. The Automotive business develops, manufactures and sells electric two-wheelers and supports customers through software, service and related offerings. The Cell business develops and manufactures advanced battery Cells for captive mobility, energy-storage and selected external applications.

During FY26, the Company redesigned significant elements of its operating model following a period of rapid expansion. The reset covered service operations, retail footprint, workforce deployment, expenditure governance, inventory management, fulfilment and working capital. The objective was to remove duplication, improve accountability and establish a lower recurring cost base while preserving the capabilities required to support future growth.

Quarterly progression

The improvement was visible through the year, with consolidated gross margin increasing from 25.8% in 01 FY26 to 30.9% in 02, 34.3% in 03 and 38.5% in 04. 03 represented the most intensive phase of the operating intervention, while 04 provided evidence of improved service performance, lower operating expenditure and stronger cash-flow management.

The 04 outcome should be viewed as an important milestone rather than a normalised run rate, as consolidated adjusted operating EBITDA and free cash flow remained negative and cash flow also benefited from PLI receipts and working-capital movements. The central test for the next phase is whether the Company can preserve service, margin and cost discipline while rebuilding volumes.

Strong Gross margin expansion

A leaner operating model

The retail network was rationalised to approximately 700 stores by Q3 FY26 as the Company shifted its focus from footprint size to location productivity and local relevance. Corporate and operating functions were simplified, workforce deployment was reviewed and recurring expenditure was subjected to tighter governance.

The objective of the reset was to remove duplication, manual hand-offs and fixed activities that did not create sufficient customer or financial value. Future investments will be assessed against demand visibility, service readiness, contribution, cash requirements and the expected utilisation of existing assets.

60 OLA ELECTRIC

Financial Performance Commentary

Revenue, Volume and Margin Performance

FY26 deliveries were 173,787 units compared with 359,221 units in FY25, while consolidated revenue from operations declined from Rs4,514 crore to Rs2,253 crore. The contraction reflected weaker demand momentum and the impact of the service, distribution and operating-model changes undertaken during the year.

Despite the lower revenue base, consolidated gross margin % increased by 12.7 percentage points to 30.6%. Gross profit declined from Rs806 crore to Rs690 crore, a reduction of only 14.4% compared with the 50.1% decline in revenue. This reflected stronger unit economics supported by the Gen 3 platform, vertical integration, pricing architecture, lower warranty costs and cost optimisation. 04 FY26 consolidated gross margin reached 38.5%, or 33.5% excluding PLI income.

Gross margin will continue to be evaluated alongside volume, contribution and cash conversion. Its sustainability remains dependent on product mix, pricing, commodity costs, localisation, manufacturing absorption, incentive eligibility and warranty performance.

Operating Expenditure, Profitability and Cash Flow

Consolidated operating expenditure declined from Rs2,545 crore in FY25 to Rs1,682 crore in FY26. The adjusted operating EBITDA loss narrowed from Rs1,903 crore to Rs1,203 crore, while the loss after tax narrowed from Rs2,276 crore to Rs1,833 crore. The adjusted operating EBITDA margin remained affected by the lower revenue base, underscoring the importance of rebuilding productive volumes while maintaining the reset cost structure.

On a quarterly basis, OPEX reduced from Rs779 crore in Q4 FY25 to Rs451 crore in Q1 FY26 and Rs416 crore in Q2 FY26. Expenditure increased modestly to Rs432 crore in Q3 FY26 during the intensive operating-reset and service- stabilisation phase, before declining to Rs383 crore in Q4 FY26. This represents a reduction of approximately 51% compared with Q4 FY25 and 15% through FY26 from Q1 to Q4.

Cash flow from operations improved from an outflow of Rs2,391 crore in FY25 to an outflow of Rs775 crore in FY26. Free cash-flow outflow (Cash flow from operations - CAPEX) reduced from Rs3,367 crore to Rs1,492 crore. Q4 FY26 generated positive consolidated cash flow from operations of Rs91 crore, with the Automotive business generating Rs213 crore of operating cash flow and Rs173 crore of free cash flow during the quarter.

Automotive Business Review

Gen 3 and vertical integration

The Gen 3 platform forms the foundation of the current Automotive portfolio. Its common architecture, increased use of internally developed motors and electronics, and integrated software reduce complexity across product development, manufacturing, diagnostics, service and spare-parts management. These capabilities supported the improvement in gross margin and provide a common platform for future products.

The Company will continue to internalise technologies that materially influence product performance, economics and supply-chain resilience, while working with external partners where they provide specialised capability or efficient scale. Internally developed systems will be scaled after meeting defined requirements relating to safety, quality, reliability, yield and cost.

Service stabilisation and product quality

Service recovery was a key customer-facing priority during FY26. Improved parts availability, higher technician productivity, stronger repair capability, process automation and tighter operating governance reduced average service turnaround time from approximately nine days in October 2025 to nearly one day in March 2026. Service backlog reduced from 14 days to six days and same-day closures improved to approximately 87%.

Importantly, the improvement in service performance coincided with a recovery in registrations. As service turnaround time, backlog and parts availability improved, registrations increased to 12,166 units in April 2026, up 20% month-on-month, even as the broader electric two-wheeler market declined by more than 22%. This momentum continued into Q1 FY27, when registrations increased by 97% quarter-on-quarter and market share improved from 5.1% in Q4 FY26 to 8.4%. While registrations are also influenced by products, pricing, financing, distribution and broader market conditions, the parallel improvement indicates that restoring service reliability was an important prerequisite for rebuilding customer trust and demand.

The next priority is to maintain service consistency as volumes recover. Distribution expansion, parts stocking and service capacity will be planned together, while field-service data will continue to inform engineering, manufacturing and product-quality improvements.

Distribution and installed-base opportunity

The FY26 network reset shifted the emphasis from the number of locations to the productivity, relevance and service capability of each market. The next phase combines the Companys digital capabilities with qualified dealer partners that can provide local reach, customer relationships and market knowledge. More than 1,200 indications of interest were received following the dealer-partner announcement after year-end; these represent potential partners and not operational outlets.

Subsequent to the year-end, the dealer-partner model progressed from initial interest to execution. After opening its sales and service network to dealer partners in August 2026, the Company launched its first cohort of dealeroperated stores within a month, covering cities and towns across Rajasthan, Tamil Nadu, Maharashtra, Bihar, Telangana, Uttar Pradesh and Madhya Pradesh. The Company is targeting a network of more than 500 dealerships over the next couple of quarters, while its existing company-owned stores transition into brand and product experience centres. The partner-led model is intended to deepen local-market penetration, improve customer accessibility and enable faster response across geographies.

Cell Business Review

From validation to commercial manufacturing

FY26 marked the transition of the Cell business from technology validation towards commercial manufacturing. The Company commissioned 2.5 GWh of operational capacity, increased Cell output during the year and commercially deployed the 4680 Bharat Cell in its vehicles. By the FY26 results date, the core installation required to reach 6 GWh was largely complete.

The immediate priority is to commission and utilise the 6 GWh platform, improve manufacturing yield and line stability, and deepen own-Cell integration across the Automotive portfolio. Progress will be evaluated through qualified output, quality, yield, cost, utilisation, commercial sales and cash collection rather than nameplate capacity alone.

NMC integration and LFP readiness

The Companys Cell roadmap includes complementary NMC and LFP technologies. The 4680 NMC Bharat Cell is commercially deployed and is intended for performance-oriented mobility applications where energy density and power are important. After the Conclusion of FY26, The 46100 LFP Cell received BIS certification and is vehicle- ready, providing a cost-optimised platform for mass-mobility and energy-storage applications.

This technology roadmap enables the Company to select the appropriate chemistry and form factor for each application. NMC Cells can support performance-oriented mobility products, cylindrical LFP Cells can support mass- mobility and distributed storage, and storage-optimised LFP formats can support larger commercial, industrial and utility-scale systems.

ACC PLI programme

In May 2026, the Ministry of Heavy Industries revised the milestone timeline applicable to Ola Cell Technologies under the Advanced Chemistry Cell PLI programme, providing a full five-year incentive window through CY2031 for its 20 GWh allocation. PLI disbursements are expected to be made quarterly as eligible Cell production and sales scale, subject to domestic value-addition requirements, verification, continuing compliance and approval by the relevant authorities.

The programme can support the economics and cash profile of the manufacturing ramp. However, capital allocation and liquidity planning will continue to be based on prudent assumptions, without relying on the maximum or early receipt of incentives.

Building a diversified demand pipeline

The Cell business is being developed across multiple demand pools. Captive Automotive consumption provides foundational demand and enables close integration between Cell and vehicle engineering. Energy-storage and external applications provide additional routes to commercial utilisation, while discussions with global OEMs are intended to develop a pipeline for external Cell sales.

The Company is also evaluating applications across defence, unmanned aerial vehicles and related strategic sectors. Domestic Cell manufacturing can provide greater control over technology, traceability and supply-chain continuity for applications where national security and localisation are important.

The identified pipeline includes more than 35 GWh of opportunities through signed memoranda of understanding. These opportunities vary in maturity and are not equivalent to firm orders, committed revenue or contracted cash flow.

Technology and Operating Enablers

Software and Al

Software, artificial intelligence and operating data are being applied across customer acquisition, fulfilment, service, warranty assessment, manufacturing and Cell research. In Automotive, these capabilities support lead engagement, service diagnostics and operating visibility. In Cell R&D and manufacturing, they support technical analysis, performance modelling, root-cause investigation, yield improvement and quality management.

Technology adoption will be evaluated through measurable outcomes including conversion, cycle time, first-time resolution, error reduction, yield, quality and cost. Material decisions affecting safety, customer redress, warranty, legal rights or employment will remain subject to appropriate human oversight, access controls, validation, cybersecurity and data-governance requirements.

Manufacturing and supply-chain resilience

Greater control over motors, electronics, software, battery systems and Cells can improve coordination across product development and reduce exposure to supplier-development cycles. It also increases the Companys responsibility for validation, traceability and production quality. Internal technologies will therefore be scaled after meeting defined performance, safety, reliability, yield and cost requirements.

Supply-chain localisation will be evaluated alongside quality, availability and cost. Common data across procurement, manufacturing, quality and inventory will support earlier identification of shortages, lead-time changes and quality trends.

Human Capital and Organisational Effectiveness

The FY26 operating reset included changes to workforce deployment, reporting structures and accountability. The Company simplified roles, reduced duplication and brought decision-making closer to operating issues. As activity increases, management will continue to monitor productivity, workload, capability gaps and critical-role continuity while prioritising talent investment in engineering, Cell R&D, manufacturing, quality, service, sales and dealer support.

Capital Allocation and Use of Existing Assets

The Company has invested substantially in the Futurefactory, the Gigafactory, product platforms, software and research and development through its Battery Innovation Center. The next phase of value creation will depend increasingly on improving the utilisation and productivity of these assets.

Capital allocation will therefore prioritise investments linked to commercially validated demand, safety, quality, maintenance, regulatory compliance and expected returns. Higher throughput through existing infrastructure can improve fixed-cost absorption and cash generation without requiring a proportionate increase in Automotive capital expenditure.

Investment decisions will consider utilisation, contribution, customer impact, working-capital requirements, financing needs and downside scenarios.

Internal Controls and Risk Management

The Board and Management are committed to and responsible for maintaining internal control systems required to scale, given the complexities of the operations. The framework is intended to support efficient operations, safeguard assets, prevent and detect fraud and error, maintain accurate records and enable timely and reliable financial reporting.

The Audit Committee overseas the internal audit plan and reviews the findings and management actions. The risk management committee overseas the enterprise risk management process across strategic, operational, financial, technological and regulatory risks. Business functions are responsible for identifying and managing risks within their activities, supported by common policies, escalation processes and independent assurances, where appropriate.

Subsequent Developments and Outlook

Post-Year-End Operating Update

Q1 FY27 provided initial evidence that higher activity could be supported by the reset operating structure. Orders increased by 96% quarter on quarter to 44,071 units, deliveries increased by 94% to 38,443 units and registrations increased by 97% to 43,921 units. Market share increased from 5.1% in Q4 FY26 to 8.4% in Q1 FY27.

Automotive revenue increased by 72% quarter on quarter to Rs455 crore, Automotive gross margin stood at 30.3%, and consolidated operating expenditure reduced by 21% quarter on quarter to Rs303 crore from Rs383 crore. The Company also completed a Rs780 crore qualified institutional placement during Q1 FY27, strengthening liquidity for the next phase of execution. These indicators relate to the period after FY26 and should not be interpreted as establishing a sustained recovery.

Post-Year-End Product Portfolio Developments

Mobility portfolio

After the end of FY26, the Company announced the S1Z, its most accessible scooter range, with bookings commencing at a starting price of f79,999. The S1Z is the Companys first scooter range powered by its domestically developed Bharat Cell LFP technology and has been designed to address the value-oriented segment of the electric two-wheeler market.

The product represents the next stage of the Companys Cell-to-vehicle strategy by combining internally manufactured LFP Cells with the Automotive product platform. The S1Z is also expected to be among the first products scaled through the Companys dealer-operated distribution channel. Product performance, production ramp-up and deliveries will remain subject to manufacturing and market execution.

Energy-products portfolio

Subsequent to year-end, the Company further developed the market-facing roadmap for its energy-storage portfolio. Shakti is intended to address distributed residential and commercial storage requirements, with applications across homes, solar-linked installations, telecom towers, petrol pumps, quick-commerce dark stores and smaller commercial and industrial facilities.

Mahashakti is being developed for larger commercial, industrial and utility-scale storage requirements. Potential applications and customer segments include factories, data centres, independent power producers, renewable- energy developers, utilities and grid-connected storage projects. Together, these products broaden the application of the Companys Cell technology beyond captive Automotive consumption and create additional potential demand for the 6 GWh manufacturing platform.

FY27 Priorities and Outlook: Converting the Reset into Sustainable Growth

In Automotive, the principal priorities for FY27 are to maintain service consistency, rebuild productive volumes, develop dealer-led distribution, strengthen the product portfolio and deepen engagement with the installed customer base. Growth will be evaluated through gross margin, contribution, cash conversion and customer outcomes rather than market share or volumes in isolation.

In Cells, the priority is to commission and utilise the 6 GWh platform, improve manufacturing yield and quality, increase own-Cell integration and convert the most mature external opportunities into qualified commercial sales. Demand development across captive mobility, energy storage, global OEMs and specialised applications will be aligned with manufacturing readiness, working capital and commercial economics.

Across both businesses, the Company will continue to use vertical integration, software and artificial intelligence to improve operating execution while maintaining safety, governance and capital discipline. The reset cost base and stronger gross-margin profile create the potential for operating leverage as demand and asset utilisation improve. The timing and extent of this improvement will remain dependent on demand, pricing, product mix, commodity costs, service consistency, manufacturing performance, incentive eligibility and access to capital.