Could Ola be too scattered?


Three weeks ago Rajiv Bajaj, the CEO of Bajaj Auto caused a sensation when he announced that he would bet on BET (Bajaj, Enfield and TVS Motors) the reigning two-wheeled troika eating OATS (Ola , Ather, Tork, SmartE) for breakfast, taking a hit on the upstart EV (electric vehicle) players.

Of course, the OATS companies didn’t let him. Ola co-founder Bhavish Aggarwal added a fiery emoji and retweeted a handful that read, “Lol, you’re not in the competition. Ola has sold around 90,000 scooters in a single window before it even sold. ‘only one unit leaves the factory… ”


The 36-year-old former IIT Mumbai student, who co-founded Ola with his college friend Ankit Bhati, has never shied away from facing the competition head-on. It is this attitude that has helped Ola attract $ 4.3 billion in 26 rounds of funding from reputable investors like Temasek Holdings, Warburg Pincus and Softbank, over its 11 years of existence. Still, there is a growing sense that Ola could be doing too many things at once, leading to a stretch in management bandwidth and a lack of focus.

From selling insurance to selling credit cards, delivering groceries, running cloud kitchens, selling used cars to selling electric vehicles, Ola has touched on many things. Did Ola and her leaders, in their quest for growth, bite more than they can chew?

Take Ola Financial Services. On paper, insurance may seem like a business adjacency for a ridesharing platform that includes vehicle wear and tear. But Ola isn’t just planning to sell auto insurance, she’s dabbling in all types of financial products, including credit cards and personal loans.

Need for concentration

How can it compete with players who laser focus on every segment of the financial services market? Like John Mayne, Executive Director of, a leading online insurance vendor says “You have to ask yourself, what is the DNA of the organization? When you talk about Ola you know it’s a taxi business, but when you think of you know it’s an insurance provider.

Ola, or any company trying to enter the insurance industry, needs to focus on what type of insurance product they want to sell and in which segment.

Likewise, Animesh Das, Head of Product Strategy at Acko Insurance, says running an insurance business requires specific expertise in this area. “Running an insurance business requires understanding the market. An important thing is that the insurance underwriting itself is very different because in insurance the company does not know the initial manufacturing cost, which is not the case with any other product, where you make a markup on top of that and then sell the product. “

It’s not just insurance. Take used car retailing. Again, this might sound like a natural business extension.

However, the dynamics involved in the business are not that simple. Gajendra Jangid, Co-Founder and CMO, Cars24, a leading player in the segment, says: “The difference between an industry focused business like Cars24 and a business where there are various verticals is that of a general practitioner. and a specialist doctor – we have domain expertise on what we have been doing. It’s not one of our jobs, it’s our only job and that makes all the difference.

Income is falling

Even in its core ridesharing business, which accounts for nearly 90 percent of its revenue, Ola was hit hard as revenue for the year ending March 31, 2021, fell by more than 60 percent to 884.3 crores due to the pandemic impact.

Competitor Uber also saw its revenue drop, but as a percentage it was lower than Ola’s.

Leasing rentals from drivers who rent cars in Ola, which is his second biggest earner, also fell by more than 90%. Compared to ride-sharing and leasing revenues, Ola’s statements to ROC indicate that contributions from financial services and the food business have been largely negligible. Past filings indicate that Ola’s cumulative losses could exceed 17,400 crore.

Ola did not comment despite a detailed questionnaire emailed to the company.

Currently, the focus is on Ola’s EV business, which has been split as a separate entity. Both Ola and Ola Electric present themselves as unicorns based on the investments received at a certain appraisal. Ola says that the “Future Factory” – its electric scooter factory – when fully completed, would have 15% of the two-wheeler manufacturing capacity worldwide.

The company also claimed it received reservations worth 1,100 crore for its electric scooters in just two days after reservations opened. While trial tours in some cities have been launched, it has already postponed the second booking window and delivery to the first batch of customers has yet to start. Unlike conventional players, Ola wants to deliver directly to customers by avoiding resellers. It is also not yet clear how he intends to maintain his products.

Even before delivering his first scooter, Aggarwal was talking about getting into electric motorcycles and even electric cars.

Another major cause for concern has been the recent wave of departures of senior talent from the company. Last month Ola CFO Swayam Saurabh and COO Gaurav Porwal resigned. A few weeks later, Ola’s General Counsel Sandeep Chowdhury, who had only been with the company for nine months, left. In the past, too many key executives have left.

Company sources speaking to Activity area indicated that Ola is in the process of “internal restructuring”. However, a former senior Ola official said: “It is Bhavish’s aggressive operating style that is causing the talent drain. Unless investors step in and bring in more “adult supervision,” things might not get much better. “

Acquisitions management

Ola’s management of acquisitions has also been called into question. It acquired FoodPanda only to shut it down, laying off nearly 1,500 employees in the process, though it continues to run a chain of cloud-based kitchens. While the company can defend them, claiming that they are all run as SBUs with separate teams, the management team has yet to make a single company profitable. Ola is looking to go public early next year and wants to raise around $ 1 billion to $ 2 billion through the IPO, valuing the company at around $ 7 billion.

In preparation for the IPO, the company for the first time reported pre-tax operating profit of 89.82 crore in fiscal year 2021; despite a two-thirds drop in income on a stand-alone basis. Operating profit was before considering an exceptional expense of 1,402.4 crore. In fiscal year 21, Ola achieved total revenue of 983.2 crore compared to last year’s revenue of 2,660.2 crore.

Shriram Subramanian, managing director of InGovern Research Services, a proxy consulting firm, warns that “the departure of a large number of CXO-level staff just before a planned IPO does is never a good signal ”.

All this finally leaves the question of whether Ola’s ambitions exceed delivery capabilities?

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