Ola Electric Mobility Ltd — Q3 FY26

Ola Electric Mobility Ltd Q3 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=KTOCyoqQdmY Published: 3 months ago

0:01 1 second You are muted. You can mute or unmute yourself by pressing star six. 0:09 9 seconds Ladies and gentlemen, uh good day and welcome to Ola Electric Q3 FI26 earnings conference call. As a reminder, all 0:16 16 seconds participants will be on the listenon mode and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. 0:27 27 seconds Before we begin, a few quick announcements uh for the attendees. 0:31 31 seconds 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. 0:40 40 seconds Such statements or comments are not guarantees of future of our future performance and actual results may differ from those statements. To begin 0:49 49 seconds with, I would like to request Shri Bhaveshagal, chairman and managing director of Ola Electric begin the conference. 0:56 56 seconds Uh good evening everybody. uh Friday evening air but thank you so much for joining us. Uh actually I want to start 1:02 1 minute, 2 seconds by introducing our new CFO Deepak to everybody Deepak Rastoi. He's also on the call with me. Uh and actually may I 1:10 1 minute, 10 seconds request everybody to switch off their videos. Uh those who have switched on so welcome Deepak to the company. Uh the 1:19 1 minute, 19 seconds news was made public about a couple of months back. uh and uh maybe Zepak I'll request you to make some uh opening uh 1:27 1 minute, 27 seconds remarks and then uh we will open it up to Q&A uh but looking forward to the uh interaction today. 1:34 1 minute, 34 seconds Thank you Ves. 1:36 1 minute, 36 seconds Good evening everyone and thank you for joining us for this call. 1:41 1 minute, 41 seconds So let me start with Q3. You know Q3 uh this quarter marks a structural reset for OI electric as EV penetration growth 1:51 1 minute, 51 seconds slows down and we identified gaps in service execution. We made a deliberate choice to rely our retail footprint cost 2:00 2 minutes structure and operating model to a sustainable steady state. We chose to fix the fundamentals rather than 2:07 2 minutes, 7 seconds optimize for short-term volume. uh the result is a structurally lower break even business with significantly improved operating leverage. 2:18 2 minutes, 18 seconds Now let me start with the key numbers. 2:20 2 minutes, 20 seconds For Q3 we delivered 470 crores of consolidated revenue. 2:27 2 minutes, 27 seconds uh this is the highest ever uh gross margin consolidated gross margin we have achieved which is at 34.3% 2:36 2 minutes, 36 seconds which is 16% uh you know points higher and 3.4 yearon-year basis and 3.4 four basis points higher on Q1 Q. 2:48 2 minutes, 48 seconds Uh this also actually uh we have also delivered 32,6700 deliveries during this quarter and we have produced 72,500. 3:02 3 minutes, 2 seconds Can you please put your uh things on mute please? Thank you. 3:07 3 minutes, 7 seconds The performance reflects the strength on of our vertically integrated model, Gen 3 platform economics and disciplined 3:14 3 minutes, 14 seconds execution. We continue to see gross margins stabilizing in the range of 35 to 40% during the year 25 uh financial year 26.7. 3:27 3 minutes, 27 seconds Over the last few years, we have invested approximately 5,300 crores across manufacturing, battery innovation 3:34 3 minutes, 34 seconds and R&D. This has created full vertical integration across motors, batteries, cells, electronics and software along 3:42 3 minutes, 42 seconds with scalable manufacturing infrastructure and a strong product road map. 3:48 3 minutes, 48 seconds The heavy capex phase you know which we have been investing so far is behind us. 3:52 3 minutes, 52 seconds Now our current footprint supports 1 million vehicles and 6 gawatt hour of cell capacity and the focus now shifts 4:00 4 minutes to scaling into this capacity. Actually Deepak I want to highlight this point for everybody that you know uh the 4:09 4 minutes, 9 seconds company has been in uh investment phase for since pretty much the inception about four or five years ago and we've created a capacity and this is covered 4:17 4 minutes, 17 seconds in our shareholders letter in detail about a million units a year in the automotive side and by March which is next month about 6 gawatt hour will be 4:26 4 minutes, 26 seconds installed. So now after that our capex cycle uh finishes and there'll be no new capex requirement till we cl into that 4:34 4 minutes, 34 seconds and that actually revenue potential is about uh 15,000 to 20,000 uh uh cr and 4:43 4 minutes, 43 seconds uh on gross margins like you said uh you know for the last few quarters we've been guiding or or you know forecasting 4:51 4 minutes, 51 seconds that we'll get to the 35% range and which this quarter is more or less there This also actually has been possible 4:58 4 minutes, 58 seconds because of this vertically integrated uh business model of ours. Uh gross margin 5:07 5 minutes, 7 seconds stepbystep capex R&D investments and we still see through FI27 this gross 5:15 5 minutes, 15 seconds margin going between that 35 to 40% range and just for context for everybody this is much higher than even ice industry. 5:23 5 minutes, 23 seconds Yes. where the gross margins are typically around uh high 20s or 30%. So this has been a meaningful advantage and 5:30 5 minutes, 30 seconds even on our uh uh capital uh investments if you see in the shareholders letter we actually give you a comparison between us and others there is uh no other 5:40 5 minutes, 40 seconds Indian OEM who has invested this much into pure EVcentric technologies and EVcentric manufacturing and this is a very important strength of ours and the 5:47 5 minutes, 47 seconds good news is that the capital cycle is now investment cycle is now largely behind now onwards like Deepak mentioned we are focused on uh doubling down into 5:56 5 minutes, 56 seconds growing into this and We will also cover deeper bill's cover and I will also give some commentary on the service challenges faced which we want to be very clear and acknowledge that and then how sales recovery we see happening. 6:08 6 minutes, 8 seconds Thank you so much Baves. So as Baves mentioned you know on services we acknowledge that execution gaps impacted brand trust among prospective customers. 6:17 6 minutes, 17 seconds However this is a service scale issue and not a product quality issue. 6:22 6 minutes, 22 seconds Independent survey indicates over 90% product satisfaction and warranty provisions for the current financial year and that 6:31 6 minutes, 31 seconds is expected you know the warranty provisions for the current financial year are expected in a range of 2 to 3% which is among the lowest in the Indian 6:39 6 minutes, 39 seconds EV industry through our hypers service initiative we have redesigned parts availability expanded technician trainings 6:47 6 minutes, 47 seconds strengthened governance and deployed AI automation as a Result service backlogs have reduced nearly 50% from 14 days to 6:58 6 minutes, 58 seconds around 7 to 8 days now currently and we are now completing 80% of service tickets on the same day. As service 7:04 7 minutes, 4 seconds metrics stabilize we expect our underlying strength to reassert itself. 7:10 7 minutes, 10 seconds I think on this topic also Deepak like you mentioned our you know many times we get asked products 7:19 7 minutes, 19 seconds service and you know firstly like Deepak said we do have a service challenge which we are working through that has 7:26 7 minutes, 26 seconds impacted brand trust uh and hence sales are down in the in the last couple of quarters but uh the good news is that uh 7:33 7 minutes, 33 seconds uh firstly we have improved our service operations meaningfully in the last uh 3 4 months or so. Deepuk mentioned the 7:40 7 minutes, 40 seconds numbers but more importantly our uh engineering and product strength is uh is very meaningfully uh real and much 7:48 7 minutes, 48 seconds better than our competition. Uh most customers when I meet them across stores and when I travel they say uh so your product is very good we want to buy your 7:56 7 minutes, 56 seconds product but please improve your service accessibility and service turnaround times. uh that's what we've been focused on and like Deepak mentioned one of the 8:03 8 minutes, 3 seconds things we've been telling the street is that uh the way to assess product quality between us and competition is to just look at the warranty costs. Now for our gen one platform uh because that was 8:12 8 minutes, 12 seconds the first platform we had was uh higher than industry averages but now actually we are much better than our Indian OEM peers and actually in line with global 8:20 8 minutes, 20 seconds benchmarks uh in terms of what kind of uh uh repeat rates uh or what kind of failure rates or warranty costs we are 8:29 8 minutes, 29 seconds having to uh uh uh take in our P&L and you know in the shareholders letter you'll see that at about 2 to 3%. So the 8:37 8 minutes, 37 seconds headline here is yes there's a service challenge we are fixing it uh we are fixing it uh and it's meaningfully improving we do have some journey to 8:45 8 minutes, 45 seconds cover uh and brand trust will take its time uh to recover but as a result of our cost uh improvements and structural 8:54 8 minutes, 54 seconds operational model improvements uh we've actually been able to create enough headroom and uh a lower break even point. So as we improve our service and 9:03 9 minutes, 3 seconds as sales recover we will see a faster roadmap to profitability. 9:09 9 minutes, 9 seconds Thank you Bavesh. So as we exe you know as we um during this quarter we have executed a comprehensive operating model 9:18 9 minutes, 18 seconds reset consolidated quarterly opex including these reduced to reduced from 9:25 9 minutes, 25 seconds 840 crores at peak expansion to 484 crores during this you know in Q3 and we 9:31 9 minutes, 31 seconds expect steady state between you know 200 give or take 250 to 300 kores over the next couple of quarters At this level, 9:40 9 minutes, 40 seconds our EITA break even reduces to approximately 15,000 units, you know, per month, which is 85%, you know, with 9:48 9 minutes, 48 seconds 85% or 90% of AEX fixed cost, which means, you know, we would have to just put in some incremental fixed cost, you 9:57 9 minutes, 57 seconds know, when we actually grow our business over time. Uh, which actually will drive a very very strong margin through this. 10:06 10 minutes, 6 seconds Uh no before that Deepak one more thing I want to just bring everybody's uh uh to everybody's notice is in the shareholders letter page five we have 10:14 10 minutes, 14 seconds given a very clear road map for sales recovery and growth and you know basically it's uh three themes first we 10:21 10 minutes, 21 seconds have to uh fix our service and uh rebuild the brand trust with that which uh the company is in the middle of doing 10:29 10 minutes, 29 seconds it will take us another quarter or so to fully uh institutionalize service and you know this time what we have done has 10:36 10 minutes, 36 seconds uh really taken the uh foundational building approach to fixing the front- end uh operational challenges that we 10:43 10 minutes, 43 seconds faced uh and we are seeing good results in that uh in terms of service improvement as well as cost structure uh improvements. So the road map uh to 10:52 10 minutes, 52 seconds recovery is uh fixing service you know that will actually let uh the yeah product advantage shine and I want to 11:00 11 minutes highlight a very interesting chart that we've put in here for all of you on page six which is actually the you know I'm sure when you guys all also do your 11:08 11 minutes, 8 seconds channel checks and all you'll see the customer fundamentally a two-heer customer wants range in his product and our products deliver the best range by 11:16 11 minutes, 16 seconds far in the industry and you can see there a chart where our uh range to price index and this is real range not certified range. Uh our real range to 11:24 11 minutes, 24 seconds price index is almost uh 50% higher than uh competition. So very meaningful uh uh benefit that our product has which the 11:33 11 minutes, 33 seconds customer acknowledges our existing customers definitely acknowledge it but the prospective customers who are holding back due to the the brand noise around service once that goes away they will also start uh acknowledging it. 11:44 11 minutes, 44 seconds Another important thing is we have the largest customer base in the industry given the fact that uh you know till date whatever number of two wheeler EVs 11:52 11 minutes, 52 seconds have been sold almost 30% are actually Ola vehicles. So 11 lakh customers use Ola and they actually have always 12:00 12 minutes referred as well and as service improves we uh we're very confident that they will start referencing uh Ola again. 12:09 12 minutes, 9 seconds Another important point u uh which Deepak mentioned is uh the structural cost reset uh that we have done and you 12:17 12 minutes, 17 seconds see that in page seven you know about a year ago our cost opex cost was about 850 crores and you know uh one of the 12:25 12 minutes, 25 seconds feedback we took on the street was that because we were talking about segmented uh financials earlier uh it confused the street so this time what we've done is 12:33 12 minutes, 33 seconds actually uh focused all our commentary on consolidated financials uh while we give segmented financials to uh uh to 12:41 12 minutes, 41 seconds the public for uh for transparency. So all the numbers we talk about here are consolidated financials which means even 12:48 12 minutes, 48 seconds with the gigafactory ramp these costs are actually under control. And the second thing is since our business model in the front end is a fully company owned model we've added lease expenses 12:56 12 minutes, 56 seconds to our operational uh expenses in the commentary. So one year ago it was about 844 crores and now with our cost actions 13:04 13 minutes, 4 seconds in Q3 we're reporting 484 but we've taken a lot of cost actions in Q3 uh which is in in a couple of quarters 13:11 13 minutes, 11 seconds going to take us to about a 250 300 cr uh level in terms of opex. So very meaningful improvement uh now this is a 13:19 13 minutes, 19 seconds large change and like uh Deepak said a large part of it is actually fixed in nature. So as we increase volumes back 13:26 13 minutes, 26 seconds up to the 20 30,000 levels uh the cost will not increase uh linearly that variable cost is only 10 15%. So what 13:36 13 minutes, 36 seconds this does is actually uh in a period where the uh industry is uh penetration is growing slowly and where we've had our own uh service challenges it 13:44 13 minutes, 44 seconds actually lowers the threshold of break even and arrests the cash burn in the short term but also as we improve our 13:51 13 minutes, 51 seconds sales gives us very strong operating leverage as we uh come back in our volumes. 13:58 13 minutes, 58 seconds Finally on the gigafactory Q3 marked the key milestone wherein we doubled the cell production to 2072, 14:06 14 minutes, 6 seconds you know 400 cells achieved the first commercial deployment in house 4680 B 14:12 14 minutes, 12 seconds cells and launched Ola Shaki. We are currently at 2.5 gawatt hour installed capacity scaling to 6 gawatt hour by 14:20 14 minutes, 20 seconds March 26. This positions us nuclear uniquely as the only Indian company to operationalize a scaled gigafactory and 14:29 14 minutes, 29 seconds strengthen a long-term cost and integration advantage. 14:34 14 minutes, 34 seconds Um I'm just going to add a little bit deeper on the gigafactory. Uh so the gigafactory uh you know we are the only 14:42 14 minutes, 42 seconds Indian company uh I want to underline that and write that in bold letters. 14:46 14 minutes, 46 seconds only Indian company to have operationalized the Gigafactory and actually outside of China one of the very few companies which have operationalized the Gigafactory and it 14:55 14 minutes, 55 seconds actually highlights the company's strong capabilities talent uh and uh execution strength uh as far as manufacturing and 15:03 15 minutes, 3 seconds R&D go and uh the Gigafactory is ramping up and this quarter was a highlight because uh we put ourselves into 15:10 15 minutes, 10 seconds commercial production in this quarter before that it was all pilot production uh this quarter Q3 was into commercial production. We gave our customers uh 15:18 15 minutes, 18 seconds vehicles with the 4680 bar cell and the feedback has been quite amazing and uh like I mentioned in the past the range 15:25 15 minutes, 25 seconds benefit that uh customers want our 4680 cell enhances that meaningfully and you cannot deliver the range that people 15:33 15 minutes, 33 seconds want without uh this level of a cell and in addition 4680 is not the end of it. 15:39 15 minutes, 39 seconds In fact, it was part of it. uh we we give on page 9 uh a a road map of our cell technology where we go from in the 15:48 15 minutes, 48 seconds next 12 to 24 months 4680 goes to 4600 goes to 46120 each next generation of cell actually gets us more uh uh energy 15:58 15 minutes, 58 seconds density and more fast charging performance and you know this is a kind of a technology R&D loop that we've 16:05 16 minutes, 5 seconds already proven with our uh automotive business where uh over three generations Our gross margins went up from 10% to 16:13 16 minutes, 13 seconds 35% now and our product quality improved meaningfully. Similarly on the cell this 16:21 16 minutes, 21 seconds will have a similar journey on uh gross margins as well as scale manufacturing scale and hence uh uh competitive 16:28 16 minutes, 28 seconds advantage. So this is something uh which we believe is going to be a very significant uh lever for strategic uh 16:37 16 minutes, 37 seconds strength as well as optionality in revenue in the future because I'm sure everybody is following how globally the 16:45 16 minutes, 45 seconds energy storage industry is also growing and uh the Gigafactory for us is going to obviously feed our own auto business 16:52 16 minutes, 52 seconds but also really get revenue uh and growth into this energy storage opportunity both in India and globally. 16:59 16 minutes, 59 seconds Uh that's the future optionality and the first product we launched there was Shaki. Uh Shaki has gotten very good response. 17:07 17 minutes, 7 seconds We're ramping it up in a step-by-step way as the gigafactory uh ramps up. But this really uh improves the uh kind of 17:14 17 minutes, 14 seconds optionality and uh you know I I personally believe the energy storage business globally and even in India is going to be a much bigger business than 17:22 17 minutes, 22 seconds automotive. Although automotive is our current focus and our focus is to stabilize that business by solving the the service challenges and by getting 17:30 17 minutes, 30 seconds back into sales growth. But the Gigafactory you know from the foundation of this company was a very core part of our vision to both build strategic uh 17:38 17 minutes, 38 seconds control and margins in automotive but as well as really grow into the larger energy storage uh opportunity. 17:46 17 minutes, 46 seconds To conclude, Q3 was about strengthening the foundation, restoring service execution, resetting cost, deepening 17:53 17 minutes, 53 seconds vertical integration, and advancing our sales strategy. The heavy built phase is behind us with a structurally lower 18:01 18 minutes, 1 second break even and embedded operating leverage. We are well positioned to enter the next phase of growth with significantly improved economics. 18:10 18 minutes, 10 seconds Thank you so much and I look forward for your questions now. 18:17 18 minutes, 17 seconds Thank you Babish uh and thank you Deepak. We will now begin the question and answer session. U anyone who wishes to ask a question may use the raise hand 18:26 18 minutes, 26 seconds option. If you wish to remove yourself from the question queue, you may press the raise hand option once again. 18:32 18 minutes, 32 seconds Participants are requested to unmute themselves before asking the question. 18:35 18 minutes, 35 seconds Before asking the question, we request you to introduce yourself with your full name and your organization. 18:40 18 minutes, 40 seconds Uh now we'll wait for a moment while the question Q assembles. 20:02 20 minutes, 2 seconds Thank you everyone. Uh we'll now take the first question from Mr. Arvin Sharma of City. Please unmute yourself and ask your question. 20:15 20 minutes, 15 seconds Mr. Arvin Sharma, you may ask a question now. Yeah. Hi. Hi. Uh, can you hear me? 20:25 20 minutes, 25 seconds Yes, I can. 20:27 20 minutes, 27 seconds Great. Hi. Hi, everyone. Thank you for taking my question. Uh, the first one would be more on your aspirations for the sales. Um, the production you said 20:36 20 minutes, 36 seconds has been much high has been uh you know at around 32,600 deliveries. Sorry, not production but deliveries and 15,000 is 20:44 20 minutes, 44 seconds a break even. uh given the ends on the sales part by when do you think that Ola would be closer to this uh break even at 20:53 20 minutes, 53 seconds least uh Arvin we will not be giving a time target of when uh we will get to either 15,000 a 21:02 21 minutes, 2 seconds month or higher but I want to say that see we are you know we acknowledge the service challenges uh we have to solve 21:09 21 minutes, 9 seconds them uh brand trust will take some time to recover but the inherent strengths of the company in manufacturing R&D and 21:16 21 minutes, 16 seconds product are very well intact and they are so far ahead of competition that I don't feel it's so easy for anybody to catch up. So in that sense you know we 21:25 21 minutes, 25 seconds don't worry about short-term market share. Uh we are fixing the service challenges in a very structural institutional way. 21:32 21 minutes, 32 seconds It will take some time but I do hope to give you guys some positive news. 21:38 21 minutes, 38 seconds Actually you don't even need to wait for the quarter sales numbers. You can track every every week. I'm sure you guys do. 21:45 21 minutes, 45 seconds So, uh you will we are seeing that goodness in regional uh sales metrics where we have solved service challenges 21:52 21 minutes, 52 seconds more deeply. Uh like for example in the south etc. you know maybe in some markets in the north we see uh volumes 21:58 21 minutes, 58 seconds have improved uh almost 2 to 3x in some markets uh you know wherever we have more meaningfully solved service 22:06 22 minutes, 6 seconds challenges. So we expect that to play out across the country as over the next few months we more meaningfully solve some of these challenges. 22:15 22 minutes, 15 seconds Perfect. Thanks uh Bhavesh. The second question would be uh more on accounting thing. There was a there was a fairly sharp increase in the employee cost uh 22:24 22 minutes, 24 seconds this quarter uh even if uh one was to adjust for the one-off expenses from 550 million going to almost 920 million. 22:33 22 minutes, 33 seconds Uh what do you attriate attribute this to? because last quarter you had said that it would structurally be going down given the uh uh optimization efforts 22:42 22 minutes, 42 seconds that we've undertaken. It kind of nullifies the gross margin expansion at the VA level. 22:47 22 minutes, 47 seconds Uh no see the one-off employee costs will be largely linked to the exits employee cost going up is largely linked 22:55 22 minutes, 55 seconds to exits uh of Arvin. uh we like I said we have uh done a lot of this uh cost 23:03 23 minutes, 3 seconds actions in this quarter and you know those costs are frontloading and uh the scale of those cost actions actually you will start seeing in the opex benefit in 23:10 23 minutes, 10 seconds the coming quarter you want to add to that no I I I think Arvind I will take this question offline because we do not see the way you are looking at the data 23:18 23 minutes, 18 seconds right now so let me uh you know we can you know take this question offline and then you know we resolve if there are 23:26 23 minutes, 26 seconds any which are basically you know Yeah because if anything it'll be linked to this uh one time thing but I also don't think I don't see the data like that. 23:36 23 minutes, 36 seconds Sure. Yes. One final question uh just just you know a statement that you made that 23:42 23 minutes, 42 seconds uh uh Ola is past the big apex part. Uh on the cell part uh you are still expanding beyond this hour right it the 23:51 23 minutes, 51 seconds the one goal that you told about last time that still remains. 23:56 23 minutes, 56 seconds Um so Arvin we have a PLI allocation of 20 gawatt hour phase one in that was 5 24:03 24 minutes, 3 seconds gawatt hour which will be done with this uh now as you know we are the only guy in the PLA scheme who has done anything the other guys have not done anything. 24:13 24 minutes, 13 seconds So we are in talks with the government to either elongate the timelines of the PLI or if we need to do anything we will 24:21 24 minutes, 21 seconds think of cap capital in that case separately. uh but uh hence you know for our business priorities we don't uh 24:29 24 minutes, 29 seconds expect any uh more gigafactory expansion as far as the current road map goes 24:36 24 minutes, 36 seconds this would be enough to cater to both the automotive as well as a BSS needs yeah just as a rule of thumb six gawatt 24:44 24 minutes, 44 seconds installed capacity means let's say practically you can get five out of it with the yields etc uh so 5 gawatt hour 24:52 24 minutes, 52 seconds if each product takes 3 and a half to 4 kilow R that's more that's about a million 1.2 million uh products. So between our Shaki business and our auto 25:00 25 minutes business uh that's the headroom we have in our in our own giga battery. 25:06 25 minutes, 6 seconds Gosh. So thank you so much for taking my questions. That's all from my side. Thanks. 25:11 25 minutes, 11 seconds Thank you. Uh we'll take the next question from Mr. Ishan Vargo of Bank of America. You may unmute yourself and please ask a question. 25:20 25 minutes, 20 seconds Yeah. Uh thank you for taking my question. The first one is more fundamental in nature. The EV industry has plateaued around 6 to 7% adoption 25:28 25 minutes, 28 seconds for a while now and as you've addressed in your shareholder letter as well, the industry is entering a more mature phase now. So what in your opinion would trigger this next leg of growth ahead? 25:40 25 minutes, 40 seconds Ishan uh see firstly uh like any technology adoption industry and EV is a technology adoption industry. there is 25:48 25 minutes, 48 seconds uh there's actually this notion very well established in in the valley called the crossing the chasm in terms of market adoption. I'm sure some of you 25:55 25 minutes, 55 seconds analysts would have read uh the book there. So basically what happens is the early adopters adopt and then the followers need more education and more 26:03 26 minutes, 3 seconds stability uh in terms of product experiences to adopt. It's exactly what has happened in the EV industry. Uh we 26:11 26 minutes, 11 seconds have been focused on penetration. The incumbent players don't really focus on penetration. they focus on just uh having a product with uh just to play in 26:19 26 minutes, 19 seconds the industry. So as we have in the last few quarters focused on our own operational uh uh view focus of service, 26:28 26 minutes, 28 seconds we've you know not communicated in a very uh meaningful way the benefits of EV to the customer. Uh the reality is 26:35 26 minutes, 35 seconds the benefits of EV are very strong. OPEX savings 90% lower cost of operations and for a two wheeler customer that matters in a meaningful way. So this next level 26:44 26 minutes, 44 seconds of a customer which is a follower customer needs more education and marketing of that and you'll see the company you know you'll see us do uh 26:53 26 minutes, 53 seconds some meaningful steps in that direction uh very soon. 26:59 26 minutes, 59 seconds Got that uh thanks for that. Uh secondly, last quarter we had guided for OPEC stabilizing to around 350 crores by 27:07 27 minutes, 7 seconds Q1 and FY27 while now our target is more aggressive at around 250 to 300 crores in the same time horizon. 27:13 27 minutes, 13 seconds So presuming that the structural drivers that are highlighted in the letter have been placed for a while uh but our opex has been rangebound over the last three 27:21 27 minutes, 21 seconds quarters between 470 to 500 crores. So what particular measures provide us the confidence that we can attain this uh 27:29 27 minutes, 29 seconds revised and more aggressive reduced opics within the next two quarters? 27:34 27 minutes, 34 seconds Uh seean the actions that we've taken is written there. So I'll not go over that again but a lot of those actions have been taken in towards the end of Q2 and 27:42 27 minutes, 42 seconds Q3. So in in those in that uh uh direction these two quarters have some of these one-off costs. So you don't see 27:50 27 minutes, 50 seconds the clean cost structure yet. you'll start seeing it in Q4 and you'll see more of it in Q1. Uh what we've also 27:57 27 minutes, 57 seconds done is is in in this last quarter and including in the last month January and February we've really gone deep into uh 28:05 28 minutes, 5 seconds uh into some structural changes across the board uh so that our operating leverage potential uh improves. Uh so 28:13 28 minutes, 13 seconds you'll see that all thing play out. I don't want to jump the gun here and give you too many uh micro details or give you any any very sharp numbers for the 28:21 28 minutes, 21 seconds coming quarter. Uh but I also want to highlight Ishan, I think the last one you were referencing was only auto segment, right? Whereas now what we're saying is actually consolidated. So 28:29 28 minutes, 29 seconds that's we've been able to now scale our gigafactory with much lower uh cost. Uh we've been able to optimize the 28:37 28 minutes, 37 seconds productivity in the field of our service technicians. We've been able to uh optimize some of corporate costs. We've used a lot of AI uh in our back office 28:47 28 minutes, 47 seconds processes to really optimize the cost structure there. Uh so all of these things have actually converged at this time. Uh because like I said in the 28:54 28 minutes, 54 seconds beginning uh we've used our uh this operational challenges as an opportunity to really optimize the business model 29:02 29 minutes, 2 seconds and position it right for the next phase of growth so that uh we we hit profitability faster and the cash generation happens after that. 29:11 29 minutes, 11 seconds You want to add anything to that? I I I I just wanted to just you know say that you know we are very confident of achieving these numbers that's all I can 29:19 29 minutes, 19 seconds tell you beyond what if I can add we've already done all the actions number 29:27 29 minutes, 27 seconds so you know we we are on on course to deliver that those were the questions thanks for 29:34 29 minutes, 34 seconds taking thank you u we'll take the next question from Mr. Ankal of TPG. 29:44 29 minutes, 44 seconds So you may unmute yourself and ask question. 29:48 29 minutes, 48 seconds Uh thanks uh Babesh. During a last interaction you had informed how the 29:55 29 minutes, 55 seconds company would lower its break even point through a calibrated mix of cost rationalization, 30:02 30 minutes, 2 seconds improved operational efficiencies and resource optimization. 30:07 30 minutes, 7 seconds With Ola now positioned as a lean and agile manufacturing hub for E2WS and cells, how do you plan to 30:16 30 minutes, 16 seconds leverage these structural efficiencies to further strengthen financial performance, enhance margins and drive long-term shareholder value creation? 30:29 30 minutes, 29 seconds Uh sir Arun sir, good question. uh I think the fundamental answer is what's covered in the letter that uh because we 30:36 30 minutes, 36 seconds are a vertically integrated uh operations both on the back end and the front end and our back end which is the manufacturing and R&D and supply chain 30:45 30 minutes, 45 seconds is so efficient uh because for the last four five years we've been uh hammering away at it and we have three generations of our platform we have two factories 30:52 30 minutes, 52 seconds built out uh so the benefit of of that vertical integration is already seen in our gross margins and even in our opex 31:00 31 minutes which is not as transparent into the street but our operating costs so basically the cost to manufacture per unit of our vehicle or let's say a shaky 31:07 31 minutes, 7 seconds product is actually fairly low and maybe in the future we will talk more about that same we are doing on the front end now because it's all company owned uh uh 31:16 31 minutes, 16 seconds the efficiencies we can drive on repair per technician sales per executive sales per square feet sales per store is 31:24 31 minutes, 24 seconds fairly high now in the last one year we had expanded our stores uh to 2 plus but we've now come back to the same level of 31:32 31 minutes, 32 seconds stores as we were in the first couple of quarters post IPO about a year or so back and those you know that is where largely the EV industry is and where we were also fairly deep and penetration. 31:43 31 minutes, 43 seconds So we do expect uh a higher operating leverage even on the front end uh of the uh indust of the business model. Now the 31:50 31 minutes, 50 seconds way this plays out is if you look at our gross margin today per product, our gross margin is almost 50,000 rupees per product and hence uh you know break even 31:59 31 minutes, 59 seconds is close to about 15,000 units on a consolidated AIDA and this consolidated AIDA includes all lease costs. There is nothing below this now. So we've started 32:08 32 minutes, 8 seconds uh uh uh reporting adjusted EIDA which is actually adjusted for adding lease costs into the operational expenses. So 32:16 32 minutes, 16 seconds so that you know the street can get a very clear fully loaded operating uh profitability uh lens and at that level 32:23 32 minutes, 23 seconds we feel very confident of breaking even uh in this 15,000 odd uh volume levels. 32:28 32 minutes, 28 seconds Now the obviously the focus is of the company to quickly get there by rebuilding uh service and brand trust and of letting the product benefit uh 32:37 32 minutes, 37 seconds shine in the customer which already is there. It's there in the customer sentiment as well as in the product reality. 32:44 32 minutes, 44 seconds So baves thanks for that really detailed answer. Just one small thing. Anything that keeps you worried. 32:52 32 minutes, 52 seconds [laughter] So you know the you know we have done a lot of good things in in this company. We have built a lot of strengths which is not going to be easy 33:01 33 minutes, 1 second for uh industry to catch up on. So you know our competitive positioning is not really of a concern or a risk to us. 33:09 33 minutes, 9 seconds Today the numbers are low but uh that is because of the fundamental loop of delivering good service and hence letting the product shine. So the whole 33:16 33 minutes, 16 seconds company the leadership me we are super sharp focused on the consumer on making sure we raise our service and quality and service quality levels for the 33:25 33 minutes, 25 seconds customer so that you know the honest truth of the product can shine through. 33:30 33 minutes, 30 seconds Thanks. Thanks Babes for taking my questions. 33:42 33 minutes, 42 seconds Uh we'll take the next question from Mr. Chanali Mataya Gold. 33:48 33 minutes, 48 seconds Uh you may unmute yourself and ask your question. 33:55 33 minutes, 55 seconds Sorry. No, I don't think I raised my hand. Sorry. I'll just step back in the queue. Okay. 34:11 34 minutes, 11 seconds We'll take the next question from M guy three. You may unmute yourself and uh ask a question. 34:32 34 minutes, 32 seconds This guy you may ask your question. 34:43 34 minutes, 43 seconds Okay. 34:50 34 minutes, 50 seconds Um, if there are any final questions, uh, we'll wait for that. If not, then, uh, we'll conclude the meeting. 34:58 34 minutes, 58 seconds Hello. 34:59 34 minutes, 59 seconds [clears throat] Am I a hello? 35:06 35 minutes, 6 seconds Hello lad. Hello. I don't think we can hear you properly. 35:14 35 minutes, 14 seconds Uh and due to uh shortness of time, we'll have to conclude the meeting now. 35:20 35 minutes, 20 seconds Uh we appreciate your time and all of your questions during the call today. 35:23 35 minutes, 23 seconds 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 log out from the conference call now. Thank you.