Electric vehicle maker Ola Electric has scheduled a board meeting on Thursday to consider and approve its proposal for raising funds through a private placement of non-convertible debentures (NCDs) or any other securities, in one or more tranches, it said in a stock exchange filing.
This move comes weeks after credit rating agency ICRA downgraded the company’s ratings, citing low sales volumes and a longer-than-expected period of cash burn that has plagued the company’s path to profitability.
It had mentioned that Ola Electric would need to explore additional fundraising options in the next 12-24 months as “existing cash balances gradually moderate”.
According to the ICRA report from May 1, a sizeable chunk of the company’s capital expenditure challenges remain with the setting up of its battery cell manufacturing capabilities. The agency noted the project remains exposed to risks of timely execution, demand, supply chain, and technological obsolescence.
Ola Electric, which went public in August last year, had planned to use Rs 1,227.64 crore of its IPO proceeds to expand its cell manufacturing capacity.
Additionally, the company has seen its share price slump by 39% year-to-date as regulatory troubles, slimming market share, and profitability concerns raised investor scepticism.
For context, Ola Electric has received queries from the government over discrepancies in sales data and non-compliance with trade requirement certificates, primarily relating to sales numbers issued by the company for February.
Most recently, it has been battling legacy players like Bajaj Auto and TVS Motor for market share. In April, TVS Motor became the largest electric two-wheeler manufacturer in India, followed by Ola Electric and Bajaj Auto.
(Disclaimer: Shradha Sharma, Founder and CEO of YourStory, is an independent director in Ola Electric)
Edited by Suman Singh
