About Delta Autocorp Limited

BUSINESS OVERVIEW

Delta Autocorp, founded in 2016 by Mr. Ankit Agarwal, specializes in manufacturing and selling electric 2-wheelers (2W) and 3-wheelers (3W) under the "Deltic" brand, using advanced components from reputed OEMs. Initially focused on electric 3W prototypes, the company launched its first E-Rickshaw in 2017 with a market-leading mileage of 150+ km, significantly enhancing driver earnings.

The R&D team has introduced innovations such as improved aerodynamics, enhanced torque, durable metallurgy, and gradability of 7-10 degrees for hilly terrains. Expanding in 2019, the company added affordable electric scooters designed for Tier-2 and Tier-3 towns, featuring high ground clearance and LFP batteries for better safety and longevity. The product portfolio now includes electric scooters, e-rickshaws, electric loaders, garbage carts, and spare parts, with manufacturing facilities certified by ISO 9001:2015 and approvals from ICAT and CIRT. Operating with over 300 dealers across 25 states, the company primarily focuses on B2B sales.

A recent milestone includes a ₹31 crore LOI from D. Kumar & Sales for 2,000 electric garbage carts (Deltic Garbo) for waste collection. This achievement supports Delta Autocorp’s vision of becoming a global brand, delivering cost-effective and innovative products with a strong commitment to customer satisfaction. As of 31st October, 2024, the company have total 139 Eployees. The Bankers tp the company are Axis Bank Limited and DBS Bank India Limited.

INDUSTRY ANALYSIS

INDIAN AUTOMOTIVE INDUSTRY
The Indian automobile industry has historically been a good indicator of how well the economy is doing, as the automobile sector plays a key role in both macroeconomic expansion and technological advancement. The twowheelers segment dominates the market in terms of volume, owing to a growing middle class and a huge percentage of India’s population being young. Moreover, the growing interest of companies in exploring the rural markets further aided the growth of the sector. The rising logistics and passenger transportation industries are driving up demand for commercial vehicles. Future market growth is anticipated to be fuelled by new trends including the electrification of vehicles, particularly three-wheelers and small passenger automobiles.

India enjoys a strong position in the global heavy vehicles market as it is the largest tractor producer, secondlargest bus manufacturer, and third-largest heavy truck manufacturer in the world. India’s annual production of automobiles in FY22 was 22.93 million vehicles. India has a strong market in terms of domestic demand and exports. In November 2023, total passenger vehicle sales reached 3,34,130*. Sales of Passenger Vehicles in November 2023 have been the highest, with a marginal growth of 3.7%, compared to November 2022. In FY23, total automobile exports from India stood at 47,61,487. This sector's share of the national GDP increased from 2.77% in 1992-1993 to around 7.1% presently. It employs about 19 million people directly and indirectly.

India is also a prominent auto exporter and has strong export growth expectations for the near future. In addition, several initiatives by the Government of India such as the Automotive Mission Plan 2026, scrappage policy, and production-linked incentive scheme in the Indian market are expected to make India one of the global leaders in the two-wheeler and four-wheeler market by 2022.

TRENDS IN ELECTRIC VEHICLE INDUSTRY
India is experiencing a remarkable surge in the sales of electric two-wheelers (E2Ws), signalling a transformative shift towards sustainable mobility. One of the key driving forces behind this growth is the range of incentives and government support provided to promote the adoption of electric vehicles (EVs).

All automotive vehicle segments are witnessing the electrification wave. Shared mobility segments (3Ws, commercial vehicles and taxis) are undergoing electrification to achieve better operating economics (than ICE). eCommerce and logistics players have adopted EV fleets as part of their decarbonization commitments. Central and state governments are boosting the electrification of public buses. 3Ws are getting electrified on the back of exemptions from registration and road taxes.

Within personal mobility segments (2Ws and private 4W-Passenger Vehicles), 2Ws are well positioned to lead the electrification wave in India, unlike many developed markets. This is because of high sensitivity of Indian consumers to the initial vehicle prices of EVs versus ICE vehicles (given the lower GNI per capita vs the developed markets).

E2Ws have seen an accelerated adoption journey in India, with the penetration increasing over 6x between FY 2021 and FY2022 and over 2x between FY 2022 and FY 2023, to reach penetration levels of ~4.5% of the 2W registrations reported on the Vahan Dashboard (MoRTH) in FY 2023. It has increased further to ~5.1% in H1 FY 2024. E2W registrations (and subsequently penetration as % of overall 2W registrations) were marginally lower in Q2 FY2024 than the previous quarter due to reduction in FAME subsidy, effective from June 2023.

India is one of the world's fastest-growing markets for Electric Two-Wheelers (E2Ws). The two-wheeler segment dominates the Indian automobile market, accounting for more than 70% of all registered vehicles. E2Ws are a convenient and efficient mode of transportation for short-distance travel, especially in cities. In India, the twowheeler segment accounts for more than 50% of all petrol transactions. Two-wheelers are utilized in commercial applications such as logistics fleets for food and groceries, parcel and courier services, and passenger transportrelated services. Two-wheelers that can effectively negotiate traffic are also being tested for first and last-mile connection via shared trips and bike taxi services. According to a study, electric two-wheeler sales penetration in India might surpass 80% by 2030.

The below line graph depicts the registered E2W sales between December 2021 to March 2023. It clearly illustrates the rising trajectory of E2W penetration in the Indian economy. In the month of March 2023, 86,067 registered E2W sales were recorded by the Society of Manufacturers of Electric Vehicles (SMEV).

BUSINESS STRENGTHS

1. Experienced Promoters and Management Team: Promoters Mr. Ankit Agarwal and Mrs. Priyanka Agarwal bring 14+ years of experience in finance, research, logistics, real estate, HR management, risk consultancy, and electric vehicles. Their entrepreneurial vision and industry expertise drive the company's profitable growth. A professional management team, comprising alumni from IITs, IIMs, and other prestigious institutions, enhances operational efficiency with deep domain knowledge, technical expertise, and business development acumen.

2. Customer-Centric Approach: The brand is committed to understanding and fulfilling customer needs, using insights from post-purchase feedback calls to refine product designs and enhance user comfort. This approach fosters a close-knit community and ensures a superior customer experience.

3. In-House Research and Development: The R&D facility in Uttar Pradesh focuses on in-house innovation, employing 15 skilled professionals to analyze customer needs and design EV products tailored to specific market demands.

4. Expansive Distribution Network: A strong presence in the Indian market includes 300+ dealers across 25 states and Union Territories, strategically targeting underserved Tier-2 and Tier-3 towns with a growing demand for affordable premium EV products.

5. Mass Premium Segment Focus: Addressing a market gap, the company offers premium-looking scooters with essential features like a 70-100 km range, large footboards, spacious boot space, and comfortable seating, all at accessible prices. This approach emphasizes functionality over unnecessary add-ons.

6. Quality Standards and Certifications: Manufacturing facilities are ISO 9001:2015 and BIS certified, with vehicles approved by ICAT and CIRT. A robust quality control process includes regular audits to ensure high standards across suppliers, dealers, and service providers.

7. Diversified Product Portfolio: A broad range of electric 2-wheelers and 3-wheelers caters to various market segments, providing multiple revenue streams and acting as a hedge against market fluctuations. Positioned strategically in segments accounting for 90%+ of EV sales, the company is primed for substantial market share growth

BUSINESS STRATEGIES

1. New Product Development Philosophy: The focus remains on enhancing the product portfolio with new designs to cater to diverse customer needs and price segments. Strict quality control measures and competitive pricing ensure alignment with market trends and customer demands, driving sales growth.

2. Network Expansion: A strategic plan aims to establish a dealer network exceeding 800 dealers nationwide within five years, with 30 new dealers added quarterly. This approach enhances market reach and strengthens partnerships with dealers.

3. Branding and Marketing: A robust marketing strategy includes targeted digital campaigns, influencer collaborations, and regional celebrity endorsements to boost brand visibility. Below-the-line activities like roadshows and canopy events ensure deeper local engagement and last-mile reach.

4. Strategic Tie-Ups with Government: Opportunities are being explored to supply innovative products like Electric Garbage Carts, E-scooters, and E-rickshaws under government schemes, including the Gujarat Energy Development Agency (GEDA) subsidy, which promotes EV adoption with financial incentives.

5. Deltic Service Center Initiative: Plans are in place to establish 800+ service hubs in five years, offering maintenance and repair services for both Deltic and other brands. This initiative aims to attract more customers, generate service revenue, and ensure dealership sustainability

BUSINESS RISK FACTORS

1. Dependence on EV Development: The company's growth relies on developing, manufacturing, and marketing new electric two- and three-wheelers. This process requires significant capital investment in R&D, personnel, and other resources, which may lead to cost overruns. Intense competition in technology, quality, pricing, and brand value could impact market share and unit sales, potentially increasing inventory levels.

2. Product Defects and Performance Issues: Defects or underperformance of electric vehicles could damage brand reputation, result in recalls, lawsuits, and financial liabilities, and affect overall business operations. Delayed detection of issues, negligence, or protocol failures by employees or third-party service providers may worsen the situation.

3. Competitive Market Challenges: Successfully competing against other brands requires continuous innovation, superior quality, competitive pricing, and effective marketing. Failure to achieve these benchmarks may lead to reduced sales and affect the company's position in existing and emerging markets.

4. Dealer Dependency Risk: The company's revenue is significantly reliant on maintaining strong relationships with its dealer network. Any disruption, such as the loss of key dealers or their shift to competitors, could adversely affect operations, financial performance, and revenue generation.

NOTE : Delta Autocorp faces key business risks including the need for significant investments in EV development amidst intense competition, potential product defects that could harm its reputation and finances, challenges in maintaining market competitiveness, and a heavy reliance on its dealer network for revenue. Addressing these risks is crucial for sustaining growth and market position.