Zelio E-Mobility Opens Coimbatore Plant to Chase South India Demand, Even as Its Existing Factories Run at 40%
Zelio E-Mobility makes slow-speed electric two-wheelers and three-wheelers sold through dealers in India’s smaller cities and towns. On July 13, 2026, it inaugurated a new assembly plant in Coimbatore, Tamil Nadu, adding 60,000 units of annual capacity at an investment of up to ₹1 crore, funded entirely from internal cash. The move lifts total installed capacity to 2,40,000 units — a 33% jump — but it arrives while the company’s existing 1,80,000‑unit network was operating at just 40% utilisation as of March. The expansion is a direct bet that a push into South India will lift sales sharply enough to fill the new space, with management targeting 1,25,000‑plus units in FY27.
The capacity leap, and the volume gap it must close
Zelio has scaled shipments rapidly — from just over 3,000 units in FY22 to more than 70,000 in FY26 — but its capacity has grown even faster. In the past year it expanded the original Ladwa (Haryana) plant from 72,000 to 1,20,000 units, then added a 60,000‑unit plant in Cuttack (Odisha) that began production in February 2026. That brought total capacity to 1,80,000 units, yet the company sold about 70,000 units in FY26, leaving utilisation at roughly 39%. The Coimbatore addition now stretches capacity to 2,40,000 units.
Management’s own FY27 target of “more than 125,000 units” would require nearly 80% volume growth and would still leave overall utilisation at only about 52%. Kunal Arya, Managing Director, told investors in May 2026 that the company is “committed to sustaining 75% to 80% year‑on‑year revenue growth,” but the revenue growth rate in FY26 was 81.8% and may prove harder to maintain on a much larger base without a significant lift in per‑dealer sales.
South India as a new revenue corridor
The Coimbatore plant is designed to shorten delivery times and cut freight costs for southern states — Tamil Nadu, Karnataka, Kerala, Telangana, Andhra Pradesh and South Maharashtra. Arya said on the earnings call that “the price list we had for South India will automatically reduce because transportation will decrease,” while insisting that the lower freight cost would not hurt margins. The facility starts with an initial phase output of 24,000–30,000 units a year, roughly a third of FY26’s total sales.
To absorb that capacity, the company aims to expand its dealer network from about 400 today to more than 550 in FY27, with “focused activation in South India and Northeast.” At the end of FY25, none of the southern states appeared among Zelio’s top‑10 revenue‑generating states; the Coimbatore plant is meant to change that geography fast.
Financial trajectory: profitable, but cash‑absorbing
The ramp‑up has produced strong profit‑and‑loss numbers. Consolidated revenue from operations reached ₹310.71 crore in FY26, with an EBITDA margin of 11.8% and a net margin of 9.1%. The company has been profitable since inception and carries almost no debt. However, the balance‑sheet effect of rapid growth is visible: inventory stood at ₹58.13 crore at the end of FY26, and operating cash flow was negative ₹11.2 crore, with free cash flow at negative ₹21.34 crore after capex. The ₹1 crore Coimbatore outlay is tiny by comparison and will not stretch the balance sheet, but the cash‑conversion cycle of 54 days shows that working capital continues to absorb cash even as the company expands.
| Metric | FY25 | FY26 | FY27 (management target) |
|---|---|---|---|
| Two‑wheeler unit sales | ~38,400 | >70,000 | >1,25,000 |
| Revenue from operations (₹ crore) | 172.19 | 310.71 | 75–80% YoY growth implied |
| EBITDA margin | 12.2% | 11.8% | Maintained |
| Net profit (₹ crore) | 16.01 | 28.39 | — |
| Installed capacity (units p.a.) | 72,000 | 1,80,000 | 2,40,000 |
| Capacity utilisation (approx.) | ~53% | 40% | ~52% at target |
The Coimbatore plant gives Zelio a physical foothold in a region where it has been under‑represented, and it adds production muscle ahead of the FY27 volume target. Whether that capacity gets absorbed depends on how quickly the southern dealer network can generate demand in a segment that the company itself says is growing 20–25% annually. For now, 40% utilisation of the larger factory base means the margin for error on the volume bet is slim.