Ola Electric to use R&D capital to repay debt, fund growth
The EV-maker’s board approved the reallocation of Rs 575 crore that it had raised for R&D during its IPO to repay debt and fund growth.
Electric vehicle maker Ola Electric will redirect a portion of the funds it had raised for research and development to repay debt and support future growth, as it grapples with shrinking market share.
In a board meeting on Wednesday, the company approved the reallocation of Rs 575 crore from the Rs 1,505 crore it had raised for research and development purposes during its initial public offering to help with debt and growth.
According to regulatory filings, it will use Rs 475 crore to repay debt incurred by the company or its subsidiaries and Rs 100 crore for future growth activities.
This instance marks the second time the Bhavish Aggarwal-led company has altered its IPO fund use. In August, last year, the company had received shareholder approval to alter the applications of the fundraise.
For context, in its IPO filings, the company had intended to use the Rs 1,227.64 crore towards expanding its cell manufacturing capacity, Rs 800 crore for debt repayment, Rs 1,600 crore for research and development, and Rs 1,297.42 crore towards general corporate purposes, among other uses.
This reallocation comes at a time when the EV maker is facing significant sales decline in the two-wheeler segment as competition tightens in the segment. The company, which was the largest electric vehicle manufacturer in terms of sales, sold only 3,968 units in February from 7,531 in January.
The decline in sales has also hurt the company’s top-line. In Q3, Ola Electric’s revenue more than halved to Rs 470 crore compared to Rs 1,045 crore in the year-ago period.
Despite a dip in revenue, the Bhavish Aggarwal-led firm managed to narrow its net loss for the quarter to Rs 487 crore compared to Rs 564 crore in Q3 FY25.
(Disclaimer: Shradha Sharma, Founder and CEO of YourStory, is an independent director in Ola Electric)