Exclusive: Haryana-Based Zelio Seeks to Go Public With Bullish Plan Against Big EV Players

Zelio eMobility IPO: The Indian two-wheeler electric segment is rapidly evolving as new startups are emerging from every corner of India. One of the emerging startup in the EV space is Zelio e-Bikes, providing electric mobility solutions to the people.

Republic Auto spoke to Co-Founder & MD at Zelio e Mobility Mr Kunal Arya to understand how the electric two-wheeler industry emerging, especially when the government is focussing on Make-in-India, EV infrastructure for two-wheelers, penetration of electric vehicles across various tier 1, tier 2, and tier 3 towns, and more.

Here are the edited excerpts from the exclusive interaction.

Agrawal: How many products are there in Zelio’s portfolio, how many of them are made in India and how many are imported?

Arya: First, we started with from China and now I proudly can say that 50% of our products are India-made. Like if we are doing 12 models then in the six models we are currently manufacturing in India totally 100%.

Agrawal: Which parts are you taking from India and which parts are being imported from China? Can you give the division, break up?

Arya: In this case, lithium batteries are now manufactured in India. For the plastic parts, ABS, PP and lights, we are manufacturing in India. For shockers, we are also taking from the third party. For seats, we are manufacturing in-house. Paint shop we are also doing in-house. For this, we can say, only we are dependent on China for the motor and controller. Because the motor and controller technology is not available in India.

Actually, the mid-drive motor is currently manufacturing in India. But for the hub motor, they are only assembly but it is mainly produced in China. They are taking the components from China and assembling them here in India.

Agrawal: Prime Minister Narendra Modi met Elon Musk recently. And you must have heard about the lowering of tariffs for EVs. Do you think lowering tariffs will help in bringing down the cost of the imported parts from China?

Arya: Yeah, it can help, it surely can help, but I will oppose. I will differ. I will say that because the government is promoting FAME subsidies to manufacture parts in India. I also want that government should support to manufacture all the components and all the parts in India. Instead of importing from other countries. Zelio has a mission to make it by 2026, we want to make all our 12 models. We want to become 100% manufactured in India. Made in India.

We are now working on the motor and controller as well. By 2026 we will complete it and we will manufacture it. Because all other parts we are now manufacturing in India. Like the frame, we have developed, like plastic parts and lights we have already developed in India. Paint shop we are doing in India. All the electrical components like switches, locks, wire harnesses. Everything we have developed in India.

Just we are depending on some of the components of the motor and controller from other countries. So if I tell you, that our CTO team has a mission by 2026, we have to develop that component also in India and become the first company to be 100% Indian.

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Agrawal: Are there no other companies that are in this EV space that are 100% completely Indian?

Arya: No, there are many companies like many big companies that are taking FAME subsidies. They are Indian-made products, but 10% of their, in-FAME subsidy you can also check, 90% you have to be localised and 10% of the components you can purchase from China, from a third party, like, they are purchasing motor from a third party.

That third-party motor company is purchasing some components from China. So according to FAME policy, 90% of the components should be Indian, and 10% can be outsourced. I want to be 100% Indian.

Agrawal: Since you are developing products under the make in India for India, what about the global plans like make in India for the world?

Arya: Yeah, PM Modi is pushing, our honourable Prime Minister is pushing a lot, but now we are selling scooters is, I don't think 1% of the total capacity of the Indian market. So first of all my focus is to conquer India first, and then we will go global also in the future. Because in India we have big opportunities and we have big numbers, now we have not yet achieved 1% of the Indian market.

If you talk about the numbers, so there are a lot more opportunities in India as well. So first our focus is to conquer the Indian market and be the number one leading electric two-wheeler in the Indian market. Then we will focus on global.

Agrawal: What do you think about the Infrastructure? The charging infrastructure for the 4-wheelers is currently being developed at a faster pace but in the 2-wheeler category, there are no small charging points for an EV 2-wheeler. if a person needs to charge on a normal day or at a public point, what's your take on the EV infrastructure for the four-wheelers in India?

Arya: It's very good to have four-wheelers in India. You will see it in restaurants on highways everywhere. So there is a four-wheeler charging structure. And I also agree with you that in some of the tier 1 cities like Mumbai, Delhi, Bengaluru. There is a two-wheeler infrastructure, but nowhere else is there a two-wheeler infrastructure.

So, my opinion is also that the government should promote and do joint ventures with public companies, and private companies and expand the charging infrastructure in rural areas as well.

The government should take action and regulate this part or all the EV companies should come together and make their charges of one. As of now, many connectors are used in our tool industry like SB75 and Apinon connector in connectors. So we should come up with a solution and either government should mandate one connector or all our EV companies should come together and make one connector as their main connector.  

Like every EV company who is setting up their charging infrastructure, they are making their own connectors and they are setting up their own charging stations. So it is a very big problem because no one else can charge on their charging station.

the government should take action and it should be mandatory that every each scooter should have the same connector. It will be very easy for the people so it will help a lot in expanding the charging infrastructure in India. The adoption rate will be slightly better in that case.

Agrawal: What is the penetration rate of electric scooters in a state like Haryana ? We have cities like Gurugram as well, as Faridabad, which is a tier-one city, but there are some small towns and villages in Haryana as well. So what's your penetration rate? How many scooters are sold in tier 1, tier 2, and tier 3?

Arya: I don't have the exact numbers but if you compare tier 2 and tier 3 cities there are a lot more scooters selling in tier 1 cities. In tier 1 cities you can see maximum electric scooters are sold through fleet operators like these rental scooters. Because of the battery swapping systems in tier 1 cities, rental scooters are doing good business.

In tier 2 and tier 3 cities, people are buying electric scooters because in tier 1 cities I think that range issue is more. In tier-one cities, people want more kilometres, like more than 100 kilometres. In tier 2 and tier 3 cities, they need only, per day they travel up to 40 to 50 kilometers.

So it is good for them, so they are buying electric scooters. But in tier 1 cities, they are taking the rental scooter which they can replace the batteries. and run more kilometers because in tier 1 cities if they buy a long-range battery then the scooter will be much more expensive.

So they hesitate to buy electric scooters and they buy petroleum scooters because they think that for daily usage they need to travel 100 to 150 kilometers.

if you see out of 100%, 8 to 9% of people are buying electric scooters in tier 2 and tier 3 cities. And if you go up to tier 1, then it will be in 2 or 3%.

Agrawal: How do you face the competition with the legacy brand? Like, on the one hand, they have a good range, tech, and modern features. How do you see yourselves in that race?

Arya: We are an emerging company, we are developing. We are only focusing on customer satisfaction. I think like I said I will not take a name, there was a brand, and everyone knows who has done a lot of promotions in IVL and a lot of promotions everywhere. It was a big brand, had many brands, and ambassadors also had many Bollywood actors promoting that brand.

But eventually, it doesn't do well because at last everything depends on the product. If your product is a hero product then you can do everything. If your product is a hero product you are providing good spares, and good services, then no one can stop you. Eventually, one time you come and you will succeed.

So now we are focusing mainly on spare parts and our product quality. Our product should be fit for the Indian market. Our quality should be best so that more publicity should be more so that it will increase our sales.

Agrawal: Since you are outsourcing from a third-party vendor, does the Zelio scooter come with the swapping battery as well?

Arya: No, the batteries that we are giving in high-speed models, are not swappable. They are removable batteries. Because in tier 1 cities there are so many flats that cannot charge in the basement. So we have come with a removable battery. You can remove the battery, take it to your home or your flat and you can charge it there.

Agrawal: Are there any investors in Zelio or is it 100% bootstrapped?

Arya: No, we are 100% bootstrapped.

Agrawal: What are your plans to raise funding in the near future?

Arya: We are going for SME-IPO. Soon in March, we will be filing the DRHP.

Agrawal: What are your sales figures and what is the rate of growth?

Arya: If you check our previous records from 2021 every year, our sales are getting 2x. Only because of mouth publicity. We have not done so much marketing and not spent so much money on marketing. Just because of our quality and our services and our spare parts availability, every year we are doing our sales 2x.

Agrawal: What is your current turnover? Because you have not filed DRHP, what are your financials right now?

Arya: Last financial year we closed at a turnover of ₹92 crore. This financial year we will be closing around ₹170 crore to ₹180 crore. that's why I said we are doing 2x every year. From 2021 to 2024, if you check our records, every year we have doubled our sales. Till now we have done ₹154 crore in February. So we are estimating that we will most probably close up to ₹170 crore to ₹180 crore

Agrawal: What about going to Shark Tank?

Arya: No, I don't consider Shark Tanks because as of now we have become aware, that we have achieved a good number.

Agrawal: As mentioned earlier, you are developing everything in India. Do you have an R&D centre as well?

Arya: Yeah, we have an NPD centre, the New Product Development Centre. We have concept designers, we have two concept designers, one electrical engineer and one frame and packaging engineer. And now after we are also going to expand it, we have plans by this year we want to make this NPD team a lot more bigger.

Agrawal: Currently, how many dealerships are operating in India, across the north and expansions, what's the rate on that?

Arya: Now we have more than 300 dealerships. We have 309 or 310 dealerships, as of now. Now we are working in 25 states. But majorly, our stake is in Haryana, UP, Bengal, Orissa, Madhya Pradesh, Gujarat , and Telangana. These are the states which we are doing. These states are the majorly filled up with our dealership. Like in Haryana, if I tell you, in Haryana only we have more than 30 dealerships. In West Bengal, we have 46 dealers. In Odisha only we have approximately 14 dealers.