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Ola Electric has issued a formal clarification following recent reports that raised concerns over its internal financial controls and inventory management systems. The company firmly denied any misplacement of inventory and asserted that there is no financial impact stemming from the issues flagged in its FY25 audit. The statement comes amid heightened scrutiny from auditors, regulators, and investors, as Ola Electric navigates a critical phase in its growth as India’s leading electric vehicle (EV) manufacturer.
The controversy began when statutory auditor BSR & Co. LLP highlighted “material weaknesses” in the internal control systems of Ola Electric Technologies Pvt Ltd, a wholly owned subsidiary that accounts for nearly 99% of the company’s revenue. The audit report pointed to gaps in physical verification of inventory at stores and distribution centers, raising concerns about the accuracy of Ola’s financial statements for the year ended March 2025.
Ola’s Clarification: No Misplacement, No Misstatement
In its official response, Ola Electric stated:
“There is no element of misplacement of inventory and hence, no financial impact on the company. The audit observations pertain to systems and processes, not to any loss or misstatement of assets.”
The company emphasized that the flagged issues were procedural in nature and related to documentation and verification protocols, not to actual discrepancies in inventory levels. Ola Electric further noted that it has already initiated corrective actions to strengthen its internal controls and ensure compliance with best practices in financial reporting.
What the Audit Revealed
Despite Ola’s reassurances, the audit report painted a more complex picture. BSR & Co. LLP noted that the company lacked adequate systems for physical verification of raw materials and finished goods, which could potentially result in material misstatements in inventory and cost accounting.
The report also cited discrepancies in inventory and receivables reported to banks versus those recorded in Ola’s books. For instance, Ola Electric reported ₹367 crore in inventory for Q3 FY25 in its internal accounts, while its filings with Bank of Baroda reflected ₹341 crore for the same period. Similarly, customer dues were listed as ₹1,187 crore in Ola’s books but ₹1,221 crore in bank filings.
These inconsistencies, while not necessarily indicative of fraud, raised red flags about the reliability of Ola’s financial disclosures and the robustness of its internal systems.
Investor Reaction and Market Impact
The audit revelations have had a ripple effect on investor sentiment. Shares of Ola Electric fell by over 7% on the BSE following the news, closing at ₹59.91 on Friday. Adding to the pressure, SoftBank—one of Ola’s early backers—trimmed its stake by 2.15% through open market transactions, reducing its holding to 15.68%.
Other institutional investors, including Tiger Global and Z47, have also reportedly scaled back their exposure, reflecting growing caution amid regulatory probes and operational challenges.
Operational Challenges and Regulatory Scrutiny
Beyond financial controls, Ola Electric has faced criticism for after-sales service issues and discrepancies between reported sales and vehicle registrations. In February 2025, the company claimed to have sold 25,000 EVs, but only 8,672 were registered according to the Vahan portal. The Ministry of Road Transport and the Ministry of Heavy Industries have since sought clarifications, prompting Ola to explain that the figures represented bookings rather than deliveries.
The company also faced raids at over 30 stores across Madhya Pradesh and Maharashtra earlier this year, further intensifying regulatory scrutiny.
Looking Ahead
Despite the turbulence, Ola Electric remains a key player in India’s EV revolution. The company has secured PLI certification for its Gen 3 scooters and is investing in indigenous battery cell development and rare earth magnet alternatives. CEO Bhavish Aggarwal has reiterated Ola’s commitment to innovation and transparency, stating that the company is “building for the long term.”
The current episode underscores the importance of robust governance and operational discipline as Ola Electric prepares for a potential IPO and scales its manufacturing footprint.
Sources: MediaNama, The Hindu BusinessLine, The420.in
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