Ola Electric auditor flags 'material weakness' in inventory controls

Ola Electric's auditor flagged weak inventory controls at its main unit, as SoftBank and automakers cut stakes and regulators probe sales and consumer complaints

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Ola Electric lacked adequate internal controls for physically verifying scooters at its retail outlets and state distribution hubs, resulting in a “material weakness” at one of its wholly owned subsidiaries, according to the company’s statutory auditor.

 

The internal control deficiency was identified at Ola Electric Technologies, the key operating arm of Ola Electric Mobility, which contributed the bulk of the company’s revenue in fiscal 2024–25. BSR & Co. LLP, the statutory auditor for both entities, flagged a material weakness in internal controls at Ola Electric in its 2024–25 annual report—raising concerns that the lapse could impact the accuracy of the company’s inventory reporting.

 

“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 company’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.

 

However, the report also said that except for the possible effects of the material weakness described, the company has maintained, in all material respects, adequate internal financial controls with reference to financial statements. “Such internal financial controls with reference to financial statements were operating effectively as of 31 March 2025,” it added.

 

The disclosure comes amid a series of setbacks for the firm. It has been grappling with regulatory scrutiny and a rise in consumer grievances—factors that may have prompted significant sell-offs by institutional investors, according to industry sources.

 

Hyundai Motor has divested its entire stake in Ola Electric, while fellow South Korean carmaker Kia has reduced its holding in the EV startup.

 

Japanese investment giant SoftBank has offloaded 2.15 per cent of its stake in Ola Electric Mobility through open market transactions, bringing its total stake down to 15.68 per cent.

 

SoftBank’s investment arm SVF II Ostrich (DE) LLC disposed of an aggregate of 94.94 million shares in a series of disposals undertaken between 15 July and 2 September, Ola said in a BSE filing.

 

It, however, still holds 691.6 million shares in Ola Electric, making it the second-largest shareholder in the company after founder Bhavish Aggarwal.

 

Transport authorities across several Indian states have reportedly cracked down on Ola Electric in recent months, carrying out raids, shuttering showrooms, seizing vehicles, and issuing show-cause notices in response to mounting consumer complaints against the company.

 

Adding to the pressure, India’s Ministry of Heavy Industries is said to have instructed the Automotive Research Association of India (ARAI) to investigate discrepancies between Ola Electric’s reported sales volumes and official vehicle registration data, along with the wave of customer grievances. The ministry had reportedly asked for a detailed report.

 

In February 2025, Ola Electric claimed it had sold 25,000 electric scooters. However, government data from the Vahan portal indicated that only 8,600 units were registered during that month.

 

The company later clarified that the 25,000 figure referred to customer bookings, not completed deliveries. It told exchanges that revenue is recognised only upon final delivery and post-registration of the vehicle.