Ola Electric Mobility Ltd.’s initial stock offering last year attracted a lot of investors, who wanted to buy over four times the number of shares available. Now the company is struggling to find supporters despite a new focus on home battery storage.
Ola Found seeking for turnaround through new home battery storage
With decreasing market share, high cash burn, and a nearly 53% drop in share price this year, the electric scooter maker, backed by SoftBank Group Corp., has faced rejection from several financiers in recent months, according to sources familiar with the situation who wanted to remain anonymous due to the private nature of the discussions. Some talks with investors are still ongoing.
Investors are hesitant to join the company’s new Rs 1,500 crore ($168 million) fundraising effort due to Ola’s declining sales and poor financial situation. Lenders have also stayed away from a 17-billion-rupee debt plan that the company board approved in May.
Now, Chairman and Founder Bhavish Aggarwal is relying on a strategy to sell batteries to homeowners who need backup power.
Why company is in crisis management mode this year
“The company’s situation is already showing visible stress,” noted Rishi Vora and Apurva Desai, analysts at Kotak Securities Ltd., in a report dated Nov. 6. “Without recognizing and addressing key issues like sales volumes, the instability will quickly escalate into a full-blown crisis.”
Ola has been in a crisis-management mode for much of this year, dealing with regulatory raids and even accusations of technology theft across borders. Meanwhile, competitors Bajaj Auto Ltd., TVS Motor Co., Hero MotoCorp Ltd., and the startup Ather Energy Ltd. have been gaining ground.
“Ola’s early lead came when competitors were slow and selective. Now customers have reliable, well-known brands to choose from,” said Jay Kale, an analyst at Elara Securities India Pvt. “As established companies and Ather Energy expand their distribution and production, Ola will find it harder to increase its market share.”
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