Q: What is your reading of the current funding environment for startups?
Anuj Tewari: The funding environment has become difficult. There is a reality check that has happened. But we will navigate in this environment.
Q: Didn’t you struggle to raise $82 million in September 2022?
Anuj Tewari: Fundraising was difficult but not difficult. It was Magna alone that approached us in December 2021. The company was looking for a player in electric mobility and a new geography, and Yulu resonated well with its project. Our original schedule was around May to June, but there were a few process delays, and then the plan stretched a bit. But it was quite a busy road. Maga always believed in our business and had no reservations. Discussions never fell on the wrong side.
Q: What does your path to profitability look like?
Anuj Tewari: This funding (from September) will help us scale faster. The plan is to have over 100,000 bikes on the streets by the middle of next fiscal year, and somewhere in that journey we’ll hit all the positivity. We should have positive EBITDA by the end of FY23 and later in FY23 positive PBT as well. Some efficiencies will come once we start to scale.
Q: You have major operations in Bengaluru, Mumbai and Delhi. Is Yulu EBITDA positive in either of these cities right now?
Anuj Tewari: Bengaluru has a positive EBITDA, but we continue to scale our operations. The path to profitability will be to first manage costs wisely and then continue to add units that contribute enough to profitability
Q: How did your losses and business perform in FY22 compared to FY21?
Anuj Tewari: Losses were around Rs 50 crore in FY22, almost the same as the previous year, while business doubled to Rs 30 crore. Business doubled not because of scale, but because of better asset utilization.
Q: How would you respond to critics who doubt your business model and say that your path to profitability depends on industries such as e-commerce and fast-paced commerce, which themselves face questions of profitability?
Anuj Tewari: Yulu’s mobility requirement is not tied to any company. The company is not into quick commerce or e-commerce, but it basically helps with mobility. This mobility can take the form of personal use by people or use by on-demand workers. And then those on-demand workers can work for e-commerce, fast commerce, or other industries. In the times to come, a significant number of gigging jobs are expected and with this population currently underserved, Yulu is ready to seize this opportunity.
Also, remember during Covid our income has stopped as people’s mobility has been affected. But instead, we found that as people stopped moving, goods started moving. And in that case, we thought why not customize our bikes for construction workers if there’s a demand for them and it doesn’t cost too much too?
So Yulu is not straying from its business of providing first and last mile solutions to people through its bikes or where we started from is how we can decongest the roads. Today, more than 60 million people live in the top three cities, so there is huge demand for first and last mile solutions.
Q: How much of your business currently comes from the gig economy? If possible, could you share his evolution lately?
Anuj Tewari: It’s around 75-80% so far compared to 50% at the end of March and 30% initially when he had just started.
Q: Are you banking on the gig economy as you scale your business?
Anuj Tewari: We are betting on the gig economy in the short and medium term.
Q: Why don’t you see the gig economy as a long-term growth driver as well?
Anuj Tewari: For the long term, we can still see. There’s a big market there, and we have more problems to solve. As mentioned before, we started the business with the problem of decongesting cities and reducing pollution through our bikes. We are evolving today to simply respond to this changing environment.
Q: How do you plan to put 100,000 bikes on the streets? What is the timeline? Also, if possible, could you give an idea of the current fleet and its trajectory over the past two years?
Anuj Tewari: We plan to increase the fleet to 100,000 within the next 12 months. Our current fleet is 10,000. We started somewhere around 2019 so it would have taken around 8-12 months to get to 10,000 and now the plan is to grow it to 10X over the next 12 month.
Q: But don’t you have sleepless nights? What you did a year before Covid is what you aim to do in a month…
Anuj Tewari: I have sleepless nights. It takes a lot of work. Scaling will be the main focus. But the good part is that we’ve already done the homework. If we break down the numbers into PIN codes, it becomes more possible to work on them. We proceed with the deployment of the plan by creating PIN codes. The idea is to first go deep where we are already present, then we expand, then we go deep again and expand.
Q: How many PIN codes are there already? Also, which cities are you going to expand into?
Anuj Tewari: We are in three cities. We cover nearly 40% of the land area of Bengaluru and reportedly operate in 3 clusters in Delhi and 2 clusters in Mumbai. We will scale in concentric circles. Expansion into other cities will begin after reaching decent depth in existing operations locations. Although we haven’t focused on new cities yet, some of the easy candidates one can think of are Hyderabad, Chennai, Pune, Ahmedabad, and Kolkata.
Q: Are you looking for players other than Bajaj to build bikes for you?
Anuj Tewari: No. In fact, from next calendar year we will see all our bikes made by Bajaj; Currently, Yulu provides some parts and Bajaj designs and assembles them. So on the supply side, we have already linked with Bajaj. They are the main actor, and it won’t be a big deal for them. It’s a small number for them. In fact, their manufacturing capacity is way beyond what we asked for. The challenge, however, could come from the supply chain side in terms of the availability of semiconductors and chips.
Q: But you will no longer bring the parts from next year and only Bajaj will manufacture only?
Anuj Tewari: The IoT would be made by us and there are a lot of moving parts here. In addition, we are building charging infrastructure. But the good part is once you have partners like Bajaj and Magna, who help solve such challenges. There is accumulated knowledge from which we benefit.
Q: What is Yulu’s position on last year’s announcement to have 500 charging stations in Bangalore by this year?
Anuj Tewari: It will happen next year. We will reach over 500 numbers by the end of next calendar year.
Q: What do your future fundraising plans look like?
Anuj Tewari: Now our business model is going to be a bit different from now. The idea will be to have more and more green or sustainable financing. Thus, Yulu, in the next phase of the evolution of its capital structure, will add development or green loans. We have already secured a very strong term sheet from one of the global development finance institutions.
Also, probably to grow further, we will try to unbundle the balance sheet to look to reduce our assets as we move forward. We will explore renting, it will be like a partnership with someone who will give us the bikes for rent. A similar example that could be thought of may be the airline industry.
Q: But are there huge players here?
Anuj Tewari: There are no big players at the moment. This may be because unit economics has yet to be proven. But over the next two years, when there is enough scale and a profitable track record, some players will hopefully be able to take bets. Also, the investors around will need to be made aware that there is a big market coming up and they are putting their money in it.
Q: You mentioned getting green loans from DFIs. How much do you envision and from whom and when do you expect to receive the funds?
Anuj Tewari: We are very close to the signed loan agreements. We have already received the condition sheet from one of the DFIs. The company is also in the process of obtaining the term sheet from another DFI. Not only do we get loans, but we get them at a good rate. We will have them this fiscal year.
Q: What will your new equity fundraising be used for? Also, do you expect greater caution from your existing and potential investors in the times ahead?
Anuj Tewari: Going forward, equity money will mainly be needed to support the balance sheet and new initiatives like personal mobility.
Our investors who have put money in us know that they are going to take a long journey and they know that it will take time. As we say in Hindi, “aakhrot ka pedh”. Moreover, we consider our investors more as partners than providers of funds. The company will continue to be open to investors who demonstrate commitment and belief in our business model and bring something extra to the table through their expertise, connections or rich networks.
During the pandemic period, when there was plenty of cash, many unsustainable companies also got cash and now they are being challenged by the markets. Investors today are likely to allocate money only to sustainable business models and we should come out on top.
Q: Is Yulu a sustainable business model?
Anuj Tewari: Yulu is not only environmentally sustainable but also economically sustainable.