Join Ankit Agarwal, Founder & CEO, Tushar Rokde, CGO, Aman Alok, VP Sales & Marketing, Delta Autocorp Ltd. as they discuss the company’s journey in revolutionizing e-mobility in India. Discover Deltic’s vision for affordable, stylish electric vehicles and their plans for future growth.
Mubina Kapasi: E-mobility is the future. And today on Small Cap Spotlight, we will be talking to a company that’s actively contributing to this through its range of e-scooters and e-three wheelers, Delta Autocorp, which does so under its brand name, Deltic. And I have with me the spokespeople of the company, Ankit Agarwal, the founder and CEO, Tushar Rokde, the CGO, and Aman Alok, VP Sales and Marketing.
Gentlemen, thank you so much for joining us today on Small Cap Spotlight. You’re merely eight years old, but there’s already, of course, an IPO. Could you tell us a bit about the journey so far, the inception, and especially the vision that the founding team had?
Ankit Agarwal: I am the CEO and founder of the company. My name is Ankit Agarwal. And I started this company with Priyanka. Priyanka, she’s my wife.
She has a background in financial risk consulting, and she’s a graduate from Institute of Actuaries of India. So she was working as a consultant with Mercer Consultancy. And to give you a brief background about me, so I’m an electronics and communication engineer, post which I did an MBA in finance from SPGEN, after which I was working as an equity research analyst.
And after quitting my job, I did a couple of ventures, which were into real estate and logistics, post which we founded Deltic in 2016. So when we started Deltic in 2016, there were not many big players in the market. And we were one of the early players who got into the electric mobility space.
We started with a vision of providing affordable electric vehicles, stylish yet affordable vehicles to each and every household in India. So we wanted to, like, I mean, at that point of time in 2016, we started with making electric three wheelers, because at that point of time, I mean, what was happening the, like the existing three wheelers which were there, which were present on the road. So what was happening, the opex of operating those vehicles was very high.
There were no alternate sources of fuel, like CNG or LNG at most of the places. So we thought that we could perfectly leverage this gap with our electric three wheelers. And hence, we started with the idea of Deltic and we wanted to become a mainstream.
We started with a vision of becoming a mainstream EV player in the market.
Mubina Kapasi: Who are the key people in your management team who are helping you achieve that vision? It could be your key management personnel or certain individuals in the C-suite or even for that matter, people working on ground. Could you tell us a bit about how you bring the team together to help you execute your vision?
Ankit Agarwal: So absolutely. So Priyanka basically takes care of the finance and the HR operations of the company completely. So we have a very decentralized way of working. So we are as lean and as been as a startup, but we are as organized as a corporate entity.
So everybody in the team, the senior management, the key management persons are all very qualified and very, very competent in doing their tasks. So everything is decentralized and every vertical is being handled by them individually. So as I mentioned about Priyanka, she’s taking care of finance as well as HR and operations of the company.
Then we have Tushar with us. Tushar is our chief growth officer and he’s basically taking care of growth. He’ll explain his role in detail.
And Aman is the vice president sales and marketing. He’s taking care of entire sales and marketing of the company. Tushar, can you brief a bit about yourself? Right.
Tushar Rokde: Hi Mubina. So this is Tushar. I went to IIM Lucknow for my MBA and IIT Indore for my BTech, which was in mechanical.
And I have over nine years of experience in various fields like oil and gas, automobile, ancillary, as well as leadership. I’m also an ex-entrepreneur and I met Ankit during COVID times and I was really inspired by his vision, which he just said of making EVs affordable as well as stylish EVs for every household in India. And I joined as a chief officer with the core mandate of growing the company 3x to 4x in the next two to three years.
This was back in 2022. So where I come in is identifying and understanding the levers of growth. So to give you a few examples.
So finance is one of the most important. Retail finance is one of the most important lever of growth. That’s one.
Customer experience is another. Business development is another where we want to appoint the right kind of dealers, right kind of business partners who will also grow or probably who will outgrow the corporation’s business space. Right.
Apart from that, there are different channels. So one channel is B2B business where we will supply B2B or B2G business. Right.
Another channel is what we are exploring is exports, which is sending vehicles to either Africa or countries like Nepal and all. So I keep on exploring different levers of growth and, you know, try to use those levers to our advantage, which will contribute in greater market share, top line as well as bottom line. Aman, if you would like to explain.
Aman Alok: Yes. Hi, Mubina. Aman Alok, this side.
I am a computer science graduate from VTU, Karnataka. And basically, I’ve been a 2X entrepreneur. I have had one consulting firm where we had 100 clients like Microsoft, EY, Out of Living and a bunch of mobility startups.
And I have been associated with Deltix since 2018 in that sense. And as Dushyant said, I also was aligned with the vision of Ankit and the company. And I could see some of the decisions, key decisions that were very different from what the market was following and how Deltix has, you know, established and reestablished itself as a pioneer, a sustainable pioneer of the industry.
So I joined full time last year in Deltix and I’ve been taking care of marketing, branding, whatever avenues are there, ranging from digital marketing, which again, we have aced to get dealers at one of the cheapest costs, the customer acquisition costs, to this overall sales where our on-field team is constantly hustling and creating the right business partners for us. Yeah.
Ankit Agarwal: So apart from Tushar, Aman, today, like the operations and strategic sourcing is being handled by Shantanu.
Shantanu has joined us from Reliance. He is a mechanical engineer from IIT and MBA in operations from NITI, Mumbai. Then business development is being handled by Anwarul Saxena.
He’s a MBA from IMT, Ghaziabad. Then like our plant head is Mr. Anoop Chahar. He is ex-Hindustan Motors and ex-Excited, and he’s with the company, like working for the last eight years.
In fact, he was the first employer of the company. Apart from that, in marketing, we have people from Delhi College of Engineering and other places. So we have a good mix.
I’m very proud to say that we have a very strong human capital base, wherein the L-1 team is either from tier one institutes or from tier one OEMs or people who have been ex-entrepreneurs. So each of them are equally qualified in the field and they execute the vision and mission of the company very, very effectively.
Mubina Kapasi: Could you tell me about the key milestones that the company has crossed in these last eight odd years, and also what helped propel the move to go public?
Tushar Rokde: It’s a great question. So if you look at our journey, so one of the major milestones, so we started back in 2016, and like Ankit said, first we started with three wheelers. We understood that three wheelers is going to be a very fast growing category. Back then, the penetration was barely 10 to 15 percent.
Now the market penetration is more than 50 percent. When I say penetration, I mean EVs out of the total vehicles. And we took a very interesting call in 2019.
We understood that two wheelers are going to be at the forefront of growth because back then, the total number of two wheelers were almost touching two crores annually. I’m talking about entire petrol as well as EVs and all. So we launched two wheelers back in 2019.
We have grown. Since then, we have grown the company 4 to 5x. Our CAGR has been amazing.
So we are growing at a CAGR of 69 percent for the last five years. So the growth has been good. Understanding the white spaces and opportunities has been a very, very key element in Deltics DNA, where we speak with each and every customer and understand what kind of vehicles we want to make.
For example, recently, we made a change in our vehicles like two years back. We increased the size of the footboard. We increased the size of the seats.
We made the seats more comfortable. We made vehicles which were running longer. For example, we were one of the first companies in which launched a 150-kilometer range vehicle.
So these are some of the milestones or some of the decisions that we have taken. To answer your second question, why we have chosen this field or this route to raise funds? The main reason is, see Mubina, we are sitting at a very, very interesting time, 2023-2022, where the Indian investor saw democratization of investing in retail. A lot of apps like Zerodha, Grow, etc., came up.
The knowledge also increased. People started investing very freely. So we believe that we can add amazing shareholder wealth by entering this field.
One is because people are aware of how to invest and where to invest. And second is because it’s a sunrise field. It’s a sunrise domain, electric vehicles.
Gadkariji has said that by 2030, we want to have 80 percent penetration. Even if we take it conservatively, I believe at least 50 to 60 percent penetration in electric two-wheelers will be achieved by 2030. So just looking at the organic growth and the growth of the pie, we believe that this IPO is a very, very good way to go.
Another reason is that we are not a company which is selling at a negative bottom line. We are not a loss leader. We believe in sustainable growth.
So our growth philosophy is really solid and it is grounded in how the investors want to see or the shareholders want to see a business to be growing. They don’t want to see the business to be bleeding money and growing for the sake of growth.
Ankit Agarwal: Add to what Tushar said. So I would say that when we started this business, we had two paths. Either we could develop each and every component in-house and then develop the business part. But we chose the other way around.
We thought that we’ll build a business first and then slowly and steadily we would get into backward integration and other things. So I believe that we have built this business very, very pragmatically. We are one of the most capital efficient companies in the industry.
We have a high ROC of almost 49.68 percent and we have grown at a CAGR of 66.67 percent for the last eight years. We have more than 300 dealers which are present across 25 states in India and we have more than 37,000 EVs running on the road. So we thought that we have done the basics right.
And we have done this all by being bootstrapped and self-funded. So we thought that at this point of time, we thought that we could use this growth capital, which would act as a catalyst and help us propel the growth. And hence we decided to go ahead with this idea.
Mubina Kapasi: You started with electric three-wheeler prototypes and then, of course, marked a significant milestone with the e-rickshaw in 2017 and then, of course, two-wheelers. So tell us, what new segments are you planning to enter? Any new launches we can look forward to?
Tushar Rokde: So rightly said, we started with three-wheelers and then we started with two-wheelers. So right now, if you look at the market of two-wheelers, I’ve already mentioned that the penetration is already 50 percent.
It is only growing. So in three-wheelers, there is another category. So right now, we are making the kind of three-wheelers which are categorized as L3 three-wheelers.
And the another growing category is L5 three-wheelers. So if you look at just L3 plus L5 and look at the split. So right now, the split would be around 10 to 15 percent market share is of L5 and 80 to 85 percentage of L3.
We see or we foresee that this percentage to shift from L3 to L5. So L5 will be increasing. So our next strategic move will be to launch L5 vehicles.
In two-wheelers, we do plan to, after IPO, we do plan to launch a different category, which is in motorcycles. So right now, if you look at the ICE vehicles, so around 65 percent of the vehicles are motorcycles and only 35 percent of vehicles are scooters. But that is not reflected in EVs.
In EVs, only 10 percent of vehicles or probably less than that are motorcycles and 90 percent plus are scooters. So we believe that this will also shift. So looking at the future landscape, we are going to launch new products, which will cater to the growth and fuel the growth story that we are building.
Aman Alok: So we are also foraying in the B2B and the B2G segment, which could be of high importance with respect to exponential growth. We recently got an LOI for garbage vans and thousands for Assam government via our partner D. Kumar and Sons in Assam. So such events have to be amplified for the required growth.
Mubina Kapasi: So I want to talk about how big is the spare parts business, because we were just looking at that. And are you looking to scale that segment of the business as well?
Ankit Agarwal: So if you look at the total turnover of the company, about four to five percent of the revenue for us comes through spare parts. And of course, we intend to grow the spare part business because A, it’s a high margin business.
B, like, I mean, what we are doing currently, we are establishing a new vertical called EV Hub, wherein we are going to component level repairing. I think, Aman, would you like to explain more on this?
Aman Alok: Yes. So moving on, we realized that there is a huge white space in the market with respect to serviceability with the very, you know, big players also who are doing high volumes.
And the key reason being that apart from the supply chain within the company for the space and everything, even the trained manpower is really lagging. So like for your IC, you have all these service garages around you. But for EV, there is nothing.
So we came up with this whole program called EV Hub, where we researched for two years how to do child part level repairing. So I’ll just explain to you what it is. So basically, before a decade, you would have seen that in laptops and computers, any problem would come and they would replace the motherboard.
And it would be, you know, build to like build on 8000 to 10000 range. So something similar is happening in EV. And what we started doing was to do the child part repair and significantly bring down the cost and the tag turnaround time.
So we have been successfully running classes for our dealers right now. And they are being trained at a level that they could do brand agnostic servicing. So this is going to significantly increase the revenue from the spare parts.
And this year we are seeing a really good growth because of the initiative. This could be like nearly three years.
Ankit Agarwal: So we are also working on making our dealers like distributor for common components like chargers and batteries so that they can not only service our clients, but they can also service clients of other brands of scooters and three wheelers as well.
So yes, we have a very positive outlook for the revenue increase for three wheelers for spares basically. Yeah.
Tushar Rokde: And to add to this, you know, if we look at what Aman has mentioned about the EV spare part as well as repair business, we are observing that, you know, service as is one of the major growth levers as well as sustainable levers.
And you would have seen the news that, you know, a lot of companies are really struggling in the service part. So we believe that our spare part growth will outgrow the company growth and revenue growth because our dealers even today are servicing as well as repairing the competition products as well and not just Deltic products. So that is one of the major reasons that we definitely look at service as a positive contributor.
Mubina Kapasi: All right, let’s talk a little bit about numbers. If I have to look at your revenue or your volume pie, how much of a market share do you currently enjoy versus perhaps your competitors? And of course, what’s the plan to enhance your segment or your side of the pie going forward?
Aman Alok: So Mubina, basically, it’s slightly early for us to derive a general market share because we have done the hyper-local winnings right now. So if you look at East, like, you know, places like West Bengal with respect to scooters, Deltic would be coming maybe in the top five or top ten in distinguished areas.
So what we are eyeing for with respect to market share is to first establish ourselves as a market winner in the local space and then extrapolate our winnings to the national level. So again, in Bihar, with respect to three-wheelers, we have, you know, like, constantly we have been in the top five, top ten in different areas. So right now we are consolidating this and expanding nationally.
Tushar Rokde: Like Aman said, you know, we are looking at it region by region. So for Jharkhand, India, we always say that, you know, Ankit always says that India is a country made up of different countries. So each state is different in terms of consumer behavior, in terms of demand and supply equations.
So let’s say we look at Jharkhand. So we target that we want to become, you know, the second player or the first player in Jharkhand. We are already one of the top five players in Jharkhand, right? In Bihar, we target we want to enter the top five.
In UP, we want to enter the top 12. So that is how we approach, you know, the situation. And looking at, like Aman said, looking at market share, it is slightly early because the industry is barely seven percent penetrated in two years.
And, you know, going ahead in the next five years, we definitely plan to achieve a significant market share.
Mubina Kapasi: We’ve seen some negative cash flows in from operations in the recent past. Could you tell us about what the position is like today? And how are you working to mitigate this or tackle this a bit better?
Ankit Agarwal: So you’re right, Mubina.
Like in the last few months, like a couple of things were there. Like, I mean, A, like our inventory level increased because during festive times, we generally prefer to keep a higher inventory level because we don’t want to lose any sales because of lack of availability of products. So that is why the inventory level was stocked up intentionally at that point of time.
And secondly, we have started catering to certain bigger clients to whom we have to give a small credit of like five days, 10 days, 15 days time. That is why our, I mean, cash flow has been negative for this period of time. Going forward, like, I mean, apart from these bigger clients, we don’t give credit to any customers.
Like, I mean, everything is on cash and carry business. Yes, of course, going forward, we’ll have to optimize our inventory as well as reduce the credit time that we have been offering to our suppliers. So it was just a foot in the door strategy wherein we wanted to enter the market.
So that’s why we had to offer some credits, which our peers are already offering. So that is the reason why it has happened.
Mubina Kapasi: A big chunk is on account of loans and advances.
So if you could tell us a bit about where these loans and advances are essentially going.
Ankit Agarwal: In terms of loans and advances, like, I mean, like we have to take a significant portion of money from the GST department because our industry falls into the inverted duty structure. So our money was stuck for a brief period of time with the department. That’s why, I mean, that money is probably categorized as loans and advances there.
Mubina Kapasi: What’s your approach to battery technology? Are you developing proprietary battery systems perhaps or partnering with established suppliers? If you could address the range anxiety concerns that a lot of electric mobility users or potential users often have.
Tushar Rokde: So range anxiety is definitely, you know, the concern for the first time buyer or, you know, it’s a pre-buying decision.
So before I answer that, I’ll just tell you one thing. If you look at how the behavior of a typical two-wheeler scooter buyer is that they do not drive the vehicles, in our experience, more than 35 kilometers, right? If you look at the average, it would be around 25 to 35 kilometers. So right now, we have three different kinds of batteries.
When I say three different, I mean three different chemistries, right? So our batteries are on three different chemistries which provide different kind of ranges. So we have, you know, starting from 28 ampere hour to 30 ampere hour to 32, 36, right? And we are even thinking of launching 40 ampere hour battery. So Mubina, it’s across the spectrum and it is quite customizable as per the requirement.
Now, you know, to answer your second question is, are we doing something in proprietary? So right now, we are procuring from tier one vendors who have, who procure their sales from the same vendor as, let’s say, a Tata Nexon, right? So the company is called Goshen. So Goshen company is one of the largest companies in the world, which makes the sense. And we are also tied up to, you know, answer the range anxiety question, tied up with charging station operators, a few charging station operators who are installing charging stations at our dealers and they can also do it at the retail end.
Ankit Agarwal: Yeah, so Mubina, like as Tushar rightly said, so the vehicles, both in the two-wheeler as well as in the three-wheeler category, the vehicles that we make, they are intra-city vehicles. So our customers generally charge it overnight and they use it the next day. And like there is an absolute accuracy on the display about like regarding the statement of charge and other things.
So it’s very well aware that like if 10% battery is remaining, so the vehicle will run for 15 kilometers only. So there is no anomaly in that first. Secondly, as Tushar said, we are tied up with few charging operators.
So if suddenly something happens, you can get it easily charged at any nearby station. And regarding the battery technology, so we are buying batteries from tier one OEM vendors, like, I mean, who have a proven track record of providing quality material at scale. And they make the battery, they customize the battery as per our like specification design and our engineering.
So, and one more very important thing, we are one of the very few companies who have moved from NMC technology to fire-safe LFP batteries. So LFP batteries generally, they never catch fire and they have almost double life cycle as compared to normal lithium-ion batteries. So we are one of the very few companies who have moved their entire portfolio of products to fire-safe LFP batteries.
Mubina Kapasi: Now, the electric two-wheeler and three-wheeler space is of course, crowded. How does Deltic plan to differentiate itself, especially against established players like a TVS or a Mahindra or a Bajaj?
Ankit Agarwal: So when we started this business, so very early on, we realized that there’s a huge white space in the premium, in the mass premium segment. So we focused all our energies on building very, very premium looking scooters, which were available at affordable prices.
And secondly, we have a differentiated distribution strategy wherein we are targeting Bharat, that is tier two, tier three cities and rural India. So unlike most of the competitors, we are focusing more on the Begusarais and the Rachis of India rather than the Bangalore and the Mumbai’s of India. So we have a differentiated distribution strategy here.
Aman Alok: There was a space for a fundamentally strong player in terms of accessibility, servicing, design, customer experience, retail sales, as Ankit highlighted right now. I’ll just add to it that it can look like that we are in competition with the bigger legacy players and everything, but I would say that is more because of the similarity of products that we are selling and not with respect to the area of operation and the kind of features or the product variants that we are providing to the market. So zeroing down on it, as Ankit said, we are not just focusing on the Bangalore’s and the Delhi’s and the Mumbai’s, but the Begusarais and the Rachis.
So there, the, you know, the accessibility of the showroom and the service center being within a radius of 50 kilometers is something which is possible with Deltic, but not maybe with the other names that you mentioned. Similarly, if you enter a Deltic showroom, I am very much sure that even you or any member of your family will, you know, like one of our models because we are having everything ranging from something which is, you know, sporty or to something which is retro-like or something which could be, you know, interpreted with more like an active design for reference, I am telling you. So this is lagging again in most of the legacy players or the new age players that are growing.
We are mostly targeting the tier one cities with hyper feature loaded products, which also enter, you know, raises the bar of the pricing and the kind of servicing requirements that it will be coming up with. So at times like, and we are the only company, I would say in India, in entire automobile sector who speaks to their customers directly two times. So we have spoken with almost 30,000 people so far on the day third of their purchase and since person 30th day, and we keep interacting.
So we have the kind of datasets, which is the prima facie requirement of the customer. So because of that, we are in sync with our customer base and with our baby steps we have scaled so far. And we are pretty sure that in our own, you know, segment that we are competing in, while also with respect to larger picture, with respect to similarity of products, we’ll be scaling as our regional dominance model proceeds.