Ola Electric's Auditors Flag Suspected Employee Fraud, Weak Internal Controls

In Ola Electric’s FY25 annual report, its statutory auditors flagged ‘material weakness’ for in-physical verification of scooters at its stores and state distribution centres for one of its wholly-owned subsidiaries.

In the fiscal year, auditor BSR & Co. LLP Chartered Accountants noted that Ola Electric did not carry out physical verification of electric two wheelers (E2Ws) and spare parts worth INR 362 Cr located across multiple of its stores and state distribution centres.

“… [the] subsidiary company did not have an appropriate internal control system for physical verification of raw material and finished goods located at its stores and state distribution centres, which could potentially result in material misstatements in the group’s inventories, cost of materials consumed, and change in inventories of finished goods, stock-in-trade, and work-in-progress account balances,” the auditor report read.

Further, subsidiary Ola Electric Technologies Pvt Ltd also faced a “suspected fraud” in FY25, committed by its employees involving an amount of over INR 1 Cr, the auditor remarked in the company’s annual report.

Important to mention that the company faced public backlash over the quality of after service, flouting regulatory norms and mismatch of monthly sales numbers in the fiscal year.

It was reported that at least six Ola Electric stores in Madhya Pradesh and 26 stores in Maharashtra were raided by regional transport officials in mid-March.

Besides, it also came under the scanner of the Ministry of Heavy Industries (MHI) regarding discrepancies between reported sales figures and actual vehicle registrations. While the Vahan portal records 8,600 new Ola Electric registrations in February, the company claimed to have sold 25,000 scooters.

The annual report revealed that Ola Electric received email communications from the NSE seeking information about the monthly sales discrepancy. “The company, vide its response dated March 26, 2025, and April 8, 2025, has provided all the requested information to the stock exchanges which includes a clarification stating that the press announcement of 25,000 units of vehicles sold was with respect to vehicle bookings,” it added.

Ola Electric clarified to the exchanges that it recognises revenue on the basis of delivery of the scooter to the customers after completion of the registration process.

Despite an incident free first quarter of the financial year (Q1 FY26), its fundamentals continue to bleed. While its net loss in Q1 FY26 further fell 23% YoY to INR 347 Cr in the quarter, its operating revenue dropped nearly 50% YoY to INR 828 Cr.

Just a day ago, its disclosures revealed that one of its earliest backers, SoftBank Group, has offloaded over 2% stake in the company over the past two months. SoftBank’s stake in Ola Electric now stands at 15.68%. Other early backers of the company, including Z47 (formerly Matrix Partners India) and Tiger Global, also reduced their stakes between April and June this year.

Shares of Ola Electric closed at INR 59.91, down 7.25% on the BSE on Friday.

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