Note: This is a preliminary transcript and may contain inaccuracies. It will be updated with a final, fully-reviewed version soon.
Ola Electric Mobility Ltd (NSE: OLAELEC) Q4 2026 Earnings Call dated May. 20, 2026
Corporate Participants:
Bhavish Agrawal — Chairman
Deepak Rastogi — Chief Financial Officer
Unidentified Speaker
Analysts:
Unidentified Participant
Arvind Sharma — Analyst
Presentation:
Operator
Hi everyone. Good day and welcome to Ola Electric Q4 and FY26 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 we begin, 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 Bhavisha Grwal, Chairman and Managing Director and Sri Deepakastogi, CFO Ola Electric to begin the conference. To begin first I would request Deepak to start with opening remarks.
Bhavish Agrawal — Chairman
Before you start Deepak, I just want to say welcome everybody. An important quarter for us. I hope everybody has 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. So Deepak, you make your remarks and then I’ll add wherever I want to.
Deepak Rastogi — Chief Financial Officer
Yeah. Thank you so much Bhavish. So good evening everyone and thank you for joining us. Financial year 26 was a year in which volumes were lower than where we wanted to be. But 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 and 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 ships, electric, mobility, cell manufacturing and energy storage on an integrated platform. So let me first start with the margins. In Q4 for 24, 25, 26, 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.
Bhavish Agrawal — Chairman
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. And this actually shows the success of our vertically integrated approach on both the manufacturing supply chain as well as on the front end. And many people frequently ask us about the sustainability of these gross margins. And one of the potential misconceptions is that this is because of incentives. So you can see without PLI also gross margins are fairly high.
So you know, 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 and, and for we are actually now even higher, much higher than ice industry gross margins. So if we, you know, for EV competitors to catch up with us, it’s going to take a lot of investments into technology and manufacturing which is actually what has led to this meaningful strength. And 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. But still gross margins will remain fairly healthy for us in the short term also. And in the long term we can actually expect even more incrementally higher gross margins as we go.
Deepak Rastogi — Chief Financial Officer
Thank you Bhavish. So for financial year 26, consolidated revenue stood at 2,253 crores with 173794 deliveries and 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, you know, which, you know this is the first time we actually have a positive cash flows. So I’ll just talk about it and then I’ll ask Bish to obviously add his comments.
So Q4 was the first operating cash flow positive quarter. Consolidated CFO was 91 crores supported by strong gross margins, PLI inflows, lower opex and tighter working capital discipline. The auto business delivered 213 crores of CFO and 173 crores of free cash flow in Q4. This is an important milestone as Ola moves from a heavy build out phase to a disciplined scale up.
Bhavish Agrawal — Chairman
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 flow strike. And 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 halved. And that includes all opex including store lease rentals. And we are further saying that in the next couple of quarters we’ll actually get our OPEX down to about 100,120 crores a month.
So further down while business rebounds. And 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 plus percent of our OpEx is actually fixed. That means operating leverage is very high. So as we have reduced our operating cost through efficiencies and as now we are rebounding sales, a lot of it is translating into net margin for us. And this is specifically seen in the auto business. So 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. Sell 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 FY25 vs FY26 on page 15, you can see how our CFO has actually meaningfully improved over this period. And for our auto business there is no more capex needed as we scale up.
So 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, but 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. And while other competitors will need to do more capex as well as new product rollouts, we actually, we have our, you know, capacity on both automotive and gigafactory covered because all the capex is now behind us so we can easily scale up to a million units a year.
We are focused. And somewhere in the, in the note you also find that we are actually right now, not on the 31st of 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 and we have an order backlog now. So the company is highly focused on ramping up the supply chain quickly enough so that we can, we can fulfill these orders.
The backlog also and I actually expect as we improve our delivery timelines volumes will go up another 1020 percent in the near term. So 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.
Deepak Rastogi — Chief Financial Officer
Thank you Bhavesh. So the third highlight which Bhavish also touched upon is the OPEX
Unidentified Participant
Cost reset.
Deepak Rastogi — Chief Financial Officer
Consolidated OPEX including lease expenses have meaningfully reduced from 844 crores in Q4 2425 which is last year to 428 crores during this Q4 2526. This reflects network rationalization, tighter sales and service cost, lower fixed overheads and stronger operating governance. We expect OPEX to move towards approximately 350 crores. We actually spoke about in our last shareholders letter also over the next couple of quarters as the full benefit of today’s six actions flow through.
Bhavish Agrawal — Chairman
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 6 Service Backlogs as they have gone down, our sales has rebounded almost in a V shaped recovery. And the chart below that shows you week on week how our registration numbers are ramping up. And 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.
So the recovery in market share is fairly broad based.
Deepak Rastogi — Chief Financial Officer
Yeah. Back
Bhavish Agrawal — Chairman
To you Deepak.
Deepak Rastogi — Chief Financial Officer
Yeah. So this reset creates a stronger operating leverage. The core auto capex is already in place for up to 1 million. Bhavish just spoke about it. For the auto business of annual capacity and giga factory phase one infrastructure is in place for you know 6 gigawatt scale up, 6 gigawatt hour scale up. Together the asset base can support approximately 15 to 20,000 crores of annual revenue. Scale across auto and sell without needing for meaningful incremental capex with the reset OPEX base and current gross margin structure, adjusted operating EBITDA break even is achievable at around 20 to 25,000 units per month subject to pricing mix and commodity conditions.
I
Bhavish Agrawal — Chairman
Want to just underline this I know many of people on the street investors have asked us the question on the break even. So 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. So today we are just giving the communication on a consolidated financials break even. So if you see our cross margins of around 35 plus percent, 38% in this quarter ARPU or average ASP is about 1.4 lakhs or so thereabouts.
So 50,000 rupees gross profit per vehicle and OPEX console OPEX cost including lease rentals of about 300, 350 crores in the next quarter or so for the break even adjusted EBITDA break even console comes to about 20 to 25,000 units a month. And in our rebound already we are seeing us get there. 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 because 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. And 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.
So 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 and specifically NPS where there are no service delays is actually very very healthy. So we remain very confident about the customer thinking and the customer sentiment on our business and that’s why we are seeing volumes ramp up quickly as we have now largely solved service and as we are now ramping up our 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 a Google client dashboard itself. So you can see Ola is by far the highest searched brand in the EV space in India. And all these are advantages and you know our business model does not have any spends on marketing etc so that also benefits when we think of operating costs.
Deepak Rastogi — Chief Financial Officer
Thank you. So execution improvement, which you know Babish just talk about, I’ll just add some more flavor to that. So execution 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 stat down 88%, same day closures at approximately 87% and part pendency down 69%. Execution approves. Sales started responding April registrations were up 20% month on month while the broader e2 Wheeler industry declined by more than 22%
Bhavish Agrawal — Chairman
On warranty. Deepak, I would like to highlight for the team, for everybody on the call Here on page 6 of the shareholders letter in the second paragraph you can see how year on year our warranty costs have actually come down in a very material way. You know in FY25 we had a 500 plus crore of warranty cost. In FY26 we had it’s only 60 crores. 59 crores to be accurate. So 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 FY26.
And 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. So looking ahead we feel very optimistic about our sales as well as customer sentiment.
Deepak Rastogi — Chief Financial Officer
Looking ahead to Q1 27 we expect 40 to 45,000 orders and consolidated revenue of 500 to 550 crores, nearly double of the Q4 level. As volumes recover, we expect the auto business to move towards adjusted operating EBITDA and cash free to cash flow positivity to financial year 27. You know there are a lot of questions on the bike Vish. I wanted to make sure that you know we actually address this as part
Unidentified Participant
Of our narration.
Bhavish Agrawal — Chairman
Let me, let me give the headline here. So you know we launched the bike about a year ago and we’ve been very consistent about our communication in the, in the earnings calls that we are scaling it step by step. So 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. 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 and our market share in bikes is 50 plus percent. And bikes are a little different than scooters in terms of product. The customer expects more range in the bikes and that’s why our bike portfolio has slightly higher range than scooters for the customers and specifically at the top end. Actually only because of our own Bharat cell, the 4680 cell, we can offer almost a 500 kilometer certified range product. So 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. And 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.
Deepak Rastogi — Chief Financial Officer
So 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 kilowatt hour battery capacity and 500 plus kilometer certified range. Roadster is built around the core motorcycle customer needs of range, performance and reliability. The Gigafactory is now entering the scale phase. 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.
Bhavish Agrawal — Chairman
I think Deepak, before we go into operational updates, macro commentary 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. Now it’s very clear from both customer sentiment as well as government sentiment that EVCO encourage Karnai all of you have seen how EV policy today. There were some media articles that for buses etc. There will be incentives etc.
So EV encouragement is from government as well as consumer side going up. But 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 and your company there is the best position to do that. Then in the power grid itself. It’s very clear that our solar rollout has kind of maxed out unless we start deploying batteries along with it. And that’s why you can see already some announcement on floating solar along with batteries.
So the government sentiment as well as policy sentiment, whatever we read from media, seems like they will be more just like ALM in solar. There will be album alcm, there will be hopefully some extension in the ACC pli. There will be domestic procurement for DSS deployments, mandates coming, coming soon. And 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.
And you know, we have six gigawatt hours already installed. Six gigawatt hours. Two and a half was already done. The remaining three and a half is getting done this quarter. It was supposed to be done a month back, but due to the Iran war, some containers got delayed. But it’s getting done in June. And we are actually going to be expanding that 6 to 20 gigawatt hour by next year, but 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. I just want to underline this important point on the macro side that our company is very well put in position to really leverage the tide and really come, you know, create this energy security stack for our country in a meaningful way and, and monetize it. There is some commentary here on our technology. You know, we will probably skip that in our commentary. But 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.
But now we are focused on ramping up production to get revenue in the gigafactory. And 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, but there are three revenue engines now. First is mobility, which is EVs. Obviously our captive demand will eat up about 1 1/2 to 2 gigawatt hours by the end of this.
But 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 ourselves because we are prioritizing our own auto business, moving to ourselves in general over Shakti production. But as gigafactory ramps up through the next few months, Shakti will also meaningfully ramp up.
And there we have 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. So this product is called which is bigger? Shakti, more energy. So Mahashakti, it will 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 and more details will follow through the next couple of quarters.
Deepak Rastogi — Chief Financial Officer
Okay, so I just wanted to emphasize that around 15% of the orders are already on our product using MAR sales. And we plan to transition the full vehicle portfolio to our own sales by September 2026. I
Bhavish Agrawal — Chairman
Think I would underline that, Deepak. This is a meaningful transition. Already 15% on our own 4680 cells in the market. Very good feedback from customers. And by end of next quarter we plan to transition everything. So it’s a meaningful ramp up of our gigafactory happening as we speak.
Deepak Rastogi — Chief Financial Officer
So 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 Maharashti. Our financial year 2627 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.
Operator
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 and A.
Thank you everyone. We’ll take the first question from Mr. Meat Doshi from White Oak Capital. Please unmute yourself and ask a question.
Unidentified Speaker
Hello. Hello Tim. Am I audible?
Operator
Yes, you are.
Unidentified Speaker
Thank you for giving me the opportunity to ask the question. And first of all, many congratulations to have a good number in terms of margin. So just I want to know that are we planning in last quarter you told that in quarter four we are going to have a good revenue. But still it is not reflecting. Also your team has given the data at the end of March and you have a very good number of sales. Why it is not reflecting in terms of the number? That is
Questions and Answers:
Bhavish Agrawal
Okay, meet, I don’t know what exactly you’re referring to, but our registrations are public data, right? So March, April and May is trending towards, you know, 14 to 15,000. So we are growing volumes registrations, our orders are growing ahead of registrations. But like I said, we have a production backlog now. So 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 focus a lot on our operations to fix the operations and then scale again both on cost as well as customer experience.
And we started scaling volumes again in the middle of March onwards. And you know, you know the good thing about our business is volumes daily and weekly and monthly publicly in terms of registrations, the cost and the cross margin improvement is what is once a quarter you guys are able to track over a period of time. So what I can say now is our volume forecast for Q1 we have given in this is 40 to 45,000. These are orders. Registrations might be a little up or down, hopefully it will be in the same range.
But orders we are facing good healthy pull in in terms of demand.
Unidentified Speaker
Thank you for 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 Saki and that kind of UPS systems or two wheeler will be still remaining the focus for the business.
Bhavish Agrawal
Our company has two segments. Two business segments, right? So two wheeler is the core business because that is generates 100 revenue today. But our gigafactory was also always built with the vision of building cells and essential
Unidentified Participant
Solutions.
Bhavish Agrawal
Our storage solutions, right? So the Shakti product is already built it has actually a lot of carryover and platform from the Google platform. So in that sense, very low cost of Capex and R and D to build the Shakti product. We will be ramping that up over the next couple of quarters. But 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. But demand for Shakti also is very high.
Given that, you know, battery storage is a very, very fast growing theme.
Unidentified Speaker
Okay. Thank you Bhavi sir. And last time. Thank you so much.
Bhavish Agrawal
Thank you.
Unidentified Speaker
All the best. All the best. Thank you so much.
Operator
Thank you. Mr. Doshi. We’ll take the next question from Mr. Arvind Sharma of City. Please unmute yourself and ask a question.
Arvind Sharma
Hi sir. Good evening. I hope you can hear me.
Bhavish Agrawal
Yes. Hi Arvind. Hi. Hi.
Arvind Sharma
Hi. Hi Barish. Hi Gooding. Thank you for taking my question. On the. On the demand front, since you said the breaking in around 20 or thousand 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 volume? That would be the first question.
Bhavish Agrawal
So Arvind, firstly we are still in our rebound phase in terms of volumes. Because what volumes in Q4 were not our steady state volumes? Right. It was impacted by our internal operations. But you have seen the recovery since that. Now it’s the third month of recovery and we are actually not just recovering, we are growing month on month on top of that rebound. Right. So 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, 18,000 units a month.
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. But 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. So I do expect just better, you know, stability on service and improve, improved inventory availability will lead us to closer to the 20,000, 22,000 number over the course of next quarter.
Arvind Sharma
Got it. Thank you. And if you may just give us some more granularity in terms of your own sales versus what your 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 gigawatt hours?
Bhavish Agrawal
Good question, Arvind. So actually all of you know that lithium has entered an upcycle in the industry. So our advantage of our own cells has actually improved. So 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. But on just pure BOM cost alone it is cheaper for us to build versus import and 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 to 15% advantage on building our own cell including the operational overheads of the gigafactory. So you know the advantages of making in India are actually coming out to be very true in the already in our business model.
Arvind Sharma
Got it. Thank you so much for answering the question. That’s all from my side. Thanks so much.
Operator
Thank you. We’ll take the next question from Mr. Venkatesh of Motila Loswal. You may unmute yourself and ask a question.
Unidentified Participant
Okay. You will be scanning up to 6 gigawatt hours where you see there is a man. Talk about this.
Bhavish Agrawal
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 or there’s no chat box so you can please repeat your question.
Operator
Could you please repeat your question?
Unidentified Participant
Yeah. Sir, what I said is when you as a battery segment.
Operator
Okay, I think we’ll move on to the next question which is from Mr. Amood Khan of Crystal. Please unmute yourself and ask a question.
Unidentified Participant
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 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 a print media? Thanks. These are the two questions.
Bhavish Agrawal
Okay, I’ll answer the second one first. See as a philosophy we believe that our product speaks for itself. And all along in our journey we have been able to succeed with that philosophy. And as a Result, our costs are also controlled. So we don’t, 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 codings 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. So we might do something. As of now we don’t see the need to do anything immediately. On your first question, see the 6 gigawatt hours out of this. You know, roughly rule of thumb, you can assume three is already commissioned. Three is getting commissioned by end of next month.
Now the three that is commissioned already is in a ramp up phase. So 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. So the that we have already commissioned is in a ramp up phase with good yields. So 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.
So as our whole supply chain is ramping up, we are increasing our productivity and our output of the gigafactory. So over by end of next quarter, which is September, we expect our gigafactory to be producing about 2 plus gigawatt hours already. And for the whole year the allocation of capacity is 2 gigawatt hours to our in house business, maybe 1 plus gigawatt hours to external auto sales. And the remaining is focused on Shakti and Mah Shakti.
Unidentified Participant
Yeah, thanks for that. And 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 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. But are things moving on that direction?
Bhavish Agrawal
I can’t share too much but you know we have a lot of interest from people on that front. And 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. But that space is going to expand fast and we will be absolutely Focused on leading that space being the largest in capacity and revenue. And for that we will have to expand beyond 6 gigawatt hours. But 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.
Unidentified Participant
Great Bhavish, thanks a lot. Congrats on the increasing delivery numbers. Best luck.
Bhavish Agrawal
Thank
Operator
You. Thank you. We’ll take the next question from approval. The SAU of Kotak. Please unmute yourself and ask a question.
Unidentified Participant
So hi Bhavish. So two quick questions from me. Okay. So the first question is in regards to the ASP calculation that you have given. Okay. So what you’ve mentioned is that there’s a one time change in the revenue recognition policy. So could you maybe elaborate on that?
Bhavish Agrawal
Yeah. So what we did was we, we sell some, let’s call it care packages or extended warranty packages which we, which is a, let’s say three year product, five year product. But we, we were recognizing the revenue upfront. So this time with our auditors we decided that we will not recognize it up front. So that’s about a 2030 crore hit in this quarter, is that correct? Yes. Yeah. I’m not the financial expert but this is what it is. So hence you see the ASP has come down. But actually that revenue will come every quarter.
Right. Because we have already done the same.
Unidentified Participant
Okay, so this was more of a one time thing, is that correct?
Bhavish Agrawal
It will be a one time correction. So every quarter now you will see this revised approach.
Unidentified Participant
Okay. So would that be the case for the earlier quarters as well? Would the numbers be revised or would that not maybe.
Bhavish Agrawal
Deepak, you can ask. No.
Deepak Rastogi
So you know, whatever was the impact, you know, we’ve already taken baked in already in these numbers. And hence, you know, there is no one time effect which you would see. It will be already baked in the number. So whatever numbers you publish will continue with the same numbers.
Unidentified Participant
Okay. Okay. So coming to my second question. Okay, so it’s regarding the gigafactory. So from what your shareholders report told. So I understand that you want to ramp it up to 20 gigawatt hours. So I want to understand two things. Okay. So first is the, I want to understand the rationale behind, you know, going for a ramp up pretty quickly. And 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.
Bhavish Agrawal
Sure. So like we said in the report, in the letter also we will not be ramping up beyond 6 right now from a capital Allocation perspective. Right. We will first consume the grow into the 6 gigawatt hour capacity but the industry demand in India is growing faster. So 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.
Operator
All right, we’ll take the next question from Mr. Vipul Agrawal of HSBC. Please unmute yourself and ask the question.
Bhavish Agrawal
Hi Vipul, good to see you.
Unidentified Participant
Yeah. Hi Bhavish. Thank you. Thank you for taking my question. 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 1 million capacity in vehicle and I guess you will have been. You will be having just couple of quarters remaining for the capex in battery plant.
Bhavish Agrawal
Yes. So
Unidentified Participant
How should we see our capex in next two to three years
Bhavish Agrawal
In auto? We you know on an annual basis you should expect very incremental capex maybe you know 50 odd crores. That’s about it, just maintenance capex because we have very large capacity already built out. So that means the conversion of you know, EBITDA to free cash flow will be fairly high on cell business also like I said we have done all the capex for 6 gigawatt hour. 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.
So from that sense actually the business’s capex cycle is behind it and now focuses on scaling up utilization and monetization.
Unidentified Participant
So. So if you can quantify positive if you are, if it is possible to quantify like what kind of outflow we are looking in 20 by 27 and what kind of maintenance capex we are looking by 28 if possible. If you can quantify
Bhavish Agrawal
Maintenance capex will be sub 50 crores annually. I’ll just add one more nuance. We do have some R and D which we capitalize about 2030% of our overall R and D expenses that will keep coming in but in terms of PPE capex that will be below 50 crores a year.
Unidentified Participant
So okay, yeah my coming next question is on R and D only. So how should be like you are largely done with your product development as well and your gen 3 is also doing pretty well. So how do we, how should we see the R and D expense as well in coming years.
Bhavish Agrawal
See Vipul, we are a technology company and 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. And you can see how that has played out in terms of cross margin, product proposition, all of that stuff. So we will continue to invest in R D across both auto as well as cell business. It will be right now obviously as a percentage of revenue it is high because revenue was subdued in 24 but generally it should be in the mid single digits of revenue going ahead as revenue ramps up.
Unidentified Participant
That makes sense. Thank you. My second question is on the cash position right now. Basically since you talked about like lower Capex right now and your OPEX is already low. So are we looking at any major cash burn in MI27 or we will should be likely maybe like at par. How should we look at that part of the business?
Bhavish Agrawal
Yeah see we have a. On the 31st of March we had about 15501600 crores of cross cash and about 2,500 crores of debt. So we had a net debt of about 950 odd crores. We don’t expect any. There will be about 3 to 500 crores of operating cash flow burn over the course of this year as the volumes go up it could be lower if volumes rise faster but generally operating cash burn like I said after paying 25,000 orders a month will be positive. We’ll be making operating cash flow and 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 400 plus crores of debt repayments and we might also choose to accelerate some because right now our cost of debt is slightly higher.
Unidentified Participant
Thank you, that was a pretty detailed answer. Just last one on qualitative aspect of the business. So like what we have seen in last three years when you started your new stores the store experience was pretty very good and eventually deteriorated. But what we are seeing right now it has improved but again not to the extent what we have seen two years back. So 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.
Bhavish Agrawal
So Vipul, our experience has improved from let’s say 2/4 or 1/4 ago and we expect in the next 1 or 2/4 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, etc. We are focused on improving experience. We’ve spent a lot of time building the right backend 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. And the good thing is our volumes are ramping up in parallel. So 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.
Unidentified Participant
Thank. Thank you for that answer. That’s all from my side.
Operator
Thank you. We’ll take the next question from Mr. Tribavan Singh of Sonalika Family office. Please unmute yourself and ask the question.
Unidentified Participant
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. So how are we progressing on these long term initiatives? I would say
Bhavish Agrawal
Yes, very very good question. I never thought I’ll be asked a technical question in an investor meet but actually you read it in our 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. So 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 LNC.
We have though brought in our LFP cell also through the next quarter it will start ramping up in our factory. But we are ready as the industry matures for solid state and sodium, we will be bringing those products to market also.
Operator
Sorry, is there a follow up question or does that answer your question? All right, we’ll move to the next question from Mr. Jenny Javeri of JNG Holdings. Please unmute yourself and ask a question.
Unidentified Participant
Yeah. Hi Babish. 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.
Bhavish Agrawal
So I
Unidentified Participant
Just wanted to understand that why is that happening? Like even if it is a server, you know, Gen 1 or Gen 2 scooter. How. How is it that parts are unavailable?
Bhavish Agrawal
So you caught it? Well Jenny, see firstly some of the videos on social obviously are old videos. So they keep recirculating online due to competitive pressures. But you are right, one of the challenges we did face was part supply chain. See as we had ramped up our network we because we in a, in a dealer model the dealer buys the parts and the OEM distributes it through traditional distributor chains. Now we don’t do that. We send our parts directly to a service center. So 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. And our parts procurement from our suppliers was also after a part requirement came. So actually it led to 20, 30 day fulfillment time wise. So now we’ve streamlined a lot of that. So now parts are stocked in the service center as well as the part procurement is done basis forecasts. So all of this is just execution fixes that we have done. And 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 but we are ramping up the supply chains that we can fulfill part requirements better in service also.
Unidentified Participant
Okay, thanks. And one question regarding Bess. Why have we selected NMC to go into BESS when we have lfp? And also like mostly around the world it has only been lfp. So anyone getting LFP cells from China and putting into a Bess product in India would start off much cheaper than our Shakti products. So why would. So Jenny, we
Bhavish Agrawal
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’re focusing our NMC 46 series into our auto business through next quarter. But we wanted to be in the market with Shakti. So 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.
But by next quarter Shakti will have LFP so that we can ramp it up faster.
Unidentified Participant
Okay. And my last question. What I’ve noticed that there’s always, there’s been a slip up in terms of some products moving into, you know, future quarters or maybe even future years like the gig product. And so what we did, Jenny.
Bhavish Agrawal
Yeah, I understood your question. See, we decided and I think we made a public statement of this also. Maybe you missed that, that we have, we have a product roadmap in our shareholders letter also. You can see it somewhere in the slide of pages. But we decided we will not launch new products till our volumes get back up because, because we wanted to be more disciplined on new capital allocation for, for new products. Now as we have stabilized our front end operations as volumes are ramping up again, we will, we will actually go back to some new product launches over the course of this year.
Unidentified Participant
Okay. And just one last comment. I mean I think we will.
Bhavish Agrawal
In interest of time, we will. No, it’s
Unidentified Participant
A positive, it’s a positive comment. Just wanted to, just wanted to say that there was a video from some of some Garib scientists or some Twitter handle in terms of the technology that goes into your batteries. And I was very pleasantly surprised at the amount of work that you have done, but just would like to say that I think I need to even show the investors maybe, you know, in terms of maybe some kind of a analyst meet over there and stuff like that because it seems like you are doing the hard work but in terms of them market, it’s not coming even through analyst notes.
Bhavish Agrawal
Yes, very fair point, Jan. We are planning a analyst and investor day in our gigafactory sometime maybe in a month or two. That’s on our agenda. So thank you so much for seeing that technical video and appreciating it.
Unidentified Participant
Thank, thank you.
Unidentified Speaker
Thank you.
Operator
All right. I think with this we, we come to the conclusion of the session here. We appreciate your time and, 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.