About BikeWo Green Tech Limited

BikeWo Green Tech is an electric two wheeler retailer in India. The Company since its incorporation had been engaged in the business of buying and selling of used four wheelers from authorised dealers of reputed automobile brands (“New Car Dealers”). As part of their pre-owned vehicle sale business, they procure used cars from New Car Dealers, who are approached by prospective customers, who wish to sell or exchange their existing vehicles for a new vehicle. Post procuring used cars through such channels, they further display them for sale at various sites/ park and sell outlets of their designated used car dealers. They act as an intermediate channel between the New Car Dealers and their designated park and sell used car lots, by supplying the used cars for sale and earning a margin during the sale of such cars. They have created a small network which undertakes every element of automobile buying from searching for a vehicle, creating buying requirements, price discovery, booking, certification to purchase and financing and doorstep delivery. In the year 2022, with the advent of electrical vehicles in India, in order to capitalise the opportunities and potential offered by the industry segment, they diversified their business operations by venturing into marketing and selling of electric vehicles and sold franchise of their brand to ten dealers during the first quarter of FY 2022, for opening and operating their stores in Andhra Pradesh and Telangana.

Their electric vehicle business focuses on capturing the opportunity arising out of electrification of mobility in India by creating a multi-brand channel for EV two wheelers by offering franchise under our brand in the Tier – I, Tier-II and Tier-III cities. Their business model focuses on creating a dealership chain across Tier-II and Tier-III cities for setting up retail spaces which ensures high visibility and easy accessibility to customers. They focus on deepening our presence in the regions we operate in before venturing into new markets which has led them to establish brand presence in Telangana, Andhra Pradesh, Tamil Nadu, Maharashtra and Gujarat markets. They plan to continue to deepen their store network in Telangana, Andhra Pradesh, Tamil Nadu, Maharashtra and Gujarat; and also gradually plan to expand their network in Rajasthan, Kerala, Karnataka and West Bengal in pursuing their defined cluster-focused expansion strategy. 

They operate their business activities through dealership models. They offer three types of dealerships to their dealers; (i) State Dealership; (ii) Diamond Dealership; and (iii) Platinum Dealership.

INDIAN E-BIKE INDUSTRY
Torch bearer of EV revolution in India, the Electric 2-wheeler industry accounted for 55% of the total EV sales in FY2022 alone. The overall E2W sales in India during the first half (H1) of FY2023 was about 4.56 lakh units which is more than twice the sales in H1 of FY2022. During the same period, the sales of high-speed (HS) E2W was more than 65% of the overall E2W sales1. During H1 FY2023, Maharashtra recorded the highest HS-E2W sales at 53,043 units followed by Karnataka (42,371 units)and Gujarat (32,414 units). Considering the H1 FY2023 sales in E2W-HS segment, Okinawa emerged as the leader with sales of 53,550 units followed by Hero Electric (49,484 units) and Ola Electric (48,015 units). The combined HS sales of the top 10 OEMs in H1 FY2023 have already surpassed their sales in FY2022. During the 18- month period between April 2021 and September 2022, as per JMK Research estimates, more than 4.6 lakh units of lowspeed (LS) E2W were sold pan-India.2 As per JMK Research estimates, the next half of FY2023 i.e., H2 FY2023, will witness overall E2W sales of ~7.3 lakh units. • Furthermore, we expect the overall E2W market to reach 67.14 lakh vehicles by FY2027. An analysis of new products launched indicates that 54 new lithium-ion battery-based E2W models were launched in India from January to October 2022. Of this, 44 were HS models. 12 E-bikes were launched between January 2022 and October 2022. Their top speeds range from 65-180 kmph whereas the maximum battery range of these E-bikes vary between 100 km and 200 km. 5 new-entrant brands/OEMs launched 10 new models in 2022 year-to-date (YTD). E2Ws account for about 90% i.e. ~4.2 lakh units of the FAME3-2 subsidized EVs sold until 11th July 2022, signifying a gap of 58% from the FAME 2 sales target (10 lakh units). 20 OEMs/brands have E2W models with active FAME 2 certification. The L1 category (i.e., 2Ws with top speed not exceeding 45 kmph) includes 29 models across 12 OEMs. The L2 category (i.e. 2Ws with top speed over 45 kmph) includes 15 models across 8 OEMs. Also, over the course of last one year, the government undertook new initiatives bearing an impact on the E2W market as well. These include the Production-linked Incentive (PLI) Scheme for automotive sector (INR25,938 crore) and the PLI scheme for Advanced Chemistry Cell (ACC) (INR18,100 crore). Furthermore, the central government issued critical notifications vis-à-vis new guidelines for battery swapping and battery safety norms. So far, 25 states or union territories (UTs) have either issued draft or implemented their own EV policy. The total volume of investments made in the Indian E2W market so far have been ~INR14,000 Crore. In H1 FY2023 (April to September 2022) alone, investments to the tune of ~INR3,844 Crore were injected into the E2W market. The Indian E2W market, though anticipated to ride high over the long-term, still needs to overcome several challenges in terms of the inadequacies and/or inefficiencies of different support systems required in the EV ecosystem viz. retail financing, supply chain, and timely disbursal of government subsidy.

India has been witnessing tremendous EV sales growth during the last 3-4 years. E2W segment specifically is considered to be driving this growth now, accounting for 55% of the total EV sales in FY2022, against a share of 32% in FY2021. The sales of HS E2W is now more than the sales of electric threewheeler (E3W) passenger segment, a trend which has witnessed reversal since FY2022. Over the last four fiscal years (FYs) i.e., FY2019 to FY2022, India recorded total sales of ~10 lakh units of E2W3. This includes the sales of LS and HS E2Ws, selling about 6.5 lakh and 3.5 lakh units respectively. The overall E2W segment grew at a compound annual growth rate (CAGR) of 71% over this four-year period. At the segment-level, while the LS segment grew at a CAGR of 45%, the sales in the HS segment surged by more than 2x the rate of LS (115% CAGR). This trend can also be witnessed from the sales of HS-E2W during H1 FY2023 wherein HS-E2W already accounted for more than 65% of the total E2W sales.

As can be observed from figure 1 above, FY2022 has been the most significant year in terms of E2W sales in India. Further, during the first half of FY2023 (i.e., from April 2022 to September 2022), the overall E2W sales in India was about 4.6 lakh units, more than double the sales in H1 FY2022.

Internal Combustion Engine (ICE) - about E2W played a significant role in the exponential growth of HS-E2W sales, primarily over the last 1.5 years. The general 2W consumer preference has been rapidly tipping towards E2W owing to economic factors. The implementation of BS64 emission norms for all motor vehicles from 1st April 2020 mandated Internal Combustion Engine (ICE)-2W OEMs to bring significant changes in the engine technology. This shift to BS6 norms led the leading mandated ICE-2W brands to hike the on-road prices of bikes and scooters by 10-15%5. This, along with the surging petrol prices, resulted in drastic decline in the demand for ICE-2W in India. Thus, substantial increase in the total cost of ownership (TCO) of ICE-2W became a key passive driver for the E2W sales growth. As per JMK Estimates, the next half of FY2023 i.e., H2 FY2023, is likely to witness overall E2W sales of ~7.3 lakh units. The share of LS-E2W in the overall E2W sales is expected to decline unabatedly to reach less than 25% share by FY2027. The majority of the existing E2W manufacturers moving towards the manufacture of HS E2W and the government-bound crackdown vis-à-vis LS norms are some of the key reasons for this projected evolution. The Centre, for instance, recently urged states to crackdown on LS E2W manufacturers who take go-ahead from testing agencies by complying with LS norms for their E2Ws of 30 minutes power of less than 0.25 kW and having maximum speed of up to 25 km/hr but then flout rules by fitting the same vehicles with higher capacity batteries, offering these vehicles at the speeds of 40-50 km/hr. This poses a huge risk to the end-users. Further, the Ministry of Road, Transport, and Highways (MoRTH) has also cautioned state governments about these higher battery capacity electric vehicles that are evading checks under the garb of low-speed ones. These vehicles as per norms are not required to take type approvals, insurance, and mandatory display of number plates. JMK Research further estimates the overall E2W market to witness sales of 67 lakh vehicles annually by FY2027. As per these estimations, the CAGR of E2W sales from FY2022 to FY2027 is expected to be about 60.5%. This translates to E2W accounting for more than 38% of the overall 2W sales by FY2027 against the current share of 5%. In fact, from our E2W CXO survey, we could gather that 36% of the respondents also estimate this share to be more than 30%. However we estimate this rise to be leaner in the coming 1-2 years as the HS-E2W growth is likely to be restricted due to stricter norms imposed by the central government and more stringent validations as follows:

a. The Ministry of Heavy Industries (MHI) announced a list of safety tests that will be mandatory for electric vehicles manufacturers from April 2023 to receive subsidies under various EV promotion schemes including FAME 2. 

b. Crackdown on electric two-wheeler companies that allegedly did not comply with the requirement for localisation of components and hence suspension of incentive payment to the likes of Hero Electric and Okinawa. In addition, companies including Greaves Cotton’s Ampere, Rattanindia’s Revolt, Okaya, and Jitendra EV have to face an audit by ARAI (Automotive Research Association of India) to check if they meet the required level of localisation under the FAME 2 scheme. Nevertheless, the massive growth in E2W sales, as evident from the sales during the last 1.5 years, is here to stay and projected to contribute to more than 70% of the overall EV sales during the analysis period of FY2022-FY2027.

BIKEWO GREEN TECH LIMITED COMPETITIVE STRENGTHS
1. EV dealership for major OEMs with a strong focus on high growth segments
2. Dealership network and presence across various states
3. Growing presence in after-sales segment leading predictable growth in revenues and superior margins
4. Diverse market presence
5. Robust business processes leveraging digitalization
6. Experienced Promoter and professional management team with technical expertise

BIKEWO GREEN TECH LIMITED STRATEGIES
1. Continue to increase sales at their existing dealerships
2. Expand reach across select geographies and deepen the footprint in their existing markets
3. Expansion of their network and diversification of their products offered
4. Strengthen their marketing network
5. Improving operational efficiencies
6. Leveraging their Market skills and Relationships
7. Value proposition for consumers
8. Penetration into domestic markets

BIKEWO GREEN TECH LIMITED RISK FACTORS & CONCERNS
1. They plan to expand into new geographies and may be exposed to significant liability and could lose some or all of their investment in such regions.
2. They significantly rely on trading and dealerships of multi-brand Electric Vehicles.
3. The Company is dependent on external suppliers for its product requirements.
4. A large part of their revenues is dependent on a limited number of brands.
5. The stores are concentrated mainly in Telangana and Andhra Pradesh, and they generate majority of their retail sales from their stores in these states.