Close on the heels of receiving shareholder approval for the acquisition of Avail Finance, Ola CEO Bhavish Aggarwal has reduced his focus on the company’s day-to-day operations.
In an internal note to the Ola team, Aggarwal said he would spend more time with all engineering functions, team building, and on product. He added that Group CFO Ola, and CFO Ola Electric, G R Arun Kumar, will “drive the day-to-day operations of the group to ensure adequate focus on the execution of the current business.”
BusinessLine has seen the internal email sent by Bhavish Aggarwal. Avail Finance is a fintech company led by Aggarwal’s brother Ankush Aggarwal, who is likely to lead Ola Financial Services after the acquisition.
Speaking to BusinessLine on the potential reasons for the Ola CEO’s move, Chartered Accountant and CEO of CapDeck Advisors, Mohnish Wadhwa, said, “When it comes to corporate governance, it’s all about what investors want. Investors would want two companies of the same group to be driven independently to reduce the chances of misrepresentation. Abuse of power is another reason the CEO position carries its own management power in the board.” He added that the two entities’ independence is justified if Bhavish Aggarwal has stepped away, strategically it’s a good move.
Ola announced last month that it had reached an agreement to acquire a 100 per cent stake in fintech firm Avail Finance and the deal was subject to shareholder approval. It was said to be a share-swap deal valued at $50 million. The acquisition reportedly raised concerns among investors as it was a related party transaction. Earlier this week, the acquisition was approved by the shareholders.
“Such shifts are not uncommon and there can be multiple reasons for this. Bhavish might be moving to where he is best and where he can create maximum value for the company, while bringing G R Arun Kumar in a role where he can do well. It is not necessary that founders are best at running day-to-day affairs. But they do it and provide leadership as needed. Also, they might be building something big and path-breaking, which needs his thought leadership more than anything else,” said Abhishek Rungta, Founder and CEO of Indust Net Technologies, and an angel investor.
He added that having siblings or couples in reporting roles is generally discouraged to ensure that there is no personal influence on decisions, and also for governance reasons. “This may be a reason, but I doubt it; as there are many possible organisation structures that can be created to avoid Ankush reporting to Bhavish,” said Rungta.
However, a source close to the company said this move is not related to Ola Financial Services or the acquisition of Avail Finance. “Bhavish Aggarwal is not stepping away and will continue to lead the organisation. Aggarwal is just increasing his focus on tech, engineering, and products. For instance, if his focus on day-to-day operations was 70 per cent and 30 per cent on tech, engineering, and product, he is now changing it to 50-50 or 60-40. GR Arun (Kumar) will also continue to be the group CFO and will help Bhavish manage operations,” she added.
Focus on Strategic Projects
Further, in the internal note, Bhavish Aggarwal said he will be increasing focus on longer term strategic projects, including “new 2W products, the car project, innovations in quick commerce, electrifying ride hailing, cell R&D and factory, international expansion, building the Pune tech centre and Futurefoundry UK, among others.”
An Ola spokesperson told BusinessLine, “As Ola focusses on accelerating ambitious new projects like cars and cell manufacture, gigafactories and electrifying ride hailing business, amongst others, the company is ensuring adequate focus on execution excellence and keeping entrepreneurial leadership high on the new businesses.”
Group CFO Kumar in his expanded role will work with team leaders across teams to drive Ola’s key metrics, lead reviews across businesses and key cross-team projects, along with enabling better team work, and efficient cross-functional teams (CFTs). Kumar joined Ola in May 2021 as the group’s Chief Financial Officer and CFO Ola Electric. He has been leading the company’s entire manufacturing, supply chain, S&OP, construction for Ola Electric, working with everyone across mobility, auto retail, quick commerce, and also running Ola Financial Services as interim CEO.
Last year, Ola had announced plans to go public by early 2022 and was expected to raise around $1-2 billion from the IPO. However, sources told BusinessLine in March that the company’s IPO timelines have changed due to “market conditions and company readiness.”
In December 2021, Ola obtained $500 million through a Term Loan B from marquee international institutional investors. This was preceded by a fund-raise of $139 million in Series J from Edelweiss, Siddhant Partners, IIFL, Tejal Merchantile, Hero Enterprise, Vicco Laboratories, Alka DP Family Trust and Atul DP Family Trust, among others. The mobility major was last valued at $7.3 billion in its Series J round. Ola has raised a total of $3 billion in funding across multiple rounds.
April 12, 2022