Ola Electric under SEBI scanner for violating disclosure rules, shares hit
- Ola Electric recently revealed its expansion plans with new showrooms through social media posts which irked the regulator.
Ola Electric is once again under regulatory scanner after the Securities and Exchange Board of India (SEBI) sent a warning to the electric two-wheeler manufacturer for violating disclosure norms by revealing expansion details through social media platforms. The warning comes days after Ola Electric opened 3,200 showroom across India in an effort to expand its presence as well as offer after-sales service to its customers. SEBI has warned of enforcement actions in case Ola repeats such violations in the future. As a result of the warning letter from SEBI, Ola Electric's shares dropped by nearly five per cent this morning (January 8).
The SEBI took offence to the fact that Ola Electric announced its expansion plans through social media platforms like the X, formerly Twitter. Bhavish Aggarwal, CEO and Founder of Ola Electric, took to the social media platform in December to announce that the EV maker will expand its network in India with 4,000 showrooms by the end of 2024. The company opened 3,200 showrooms in a single day, on December 25, across the country.
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SEBI warning for Ola Electric
According to the SEBI, the expansion plan was implemented without publishing disclosures with the stock exchanges. The SEBI sent a warning letter to Bhavish Aggarwal on Tuesday (January 7). The letter read, "This is with reference to your disclosure on the stock exchanges dated December 2, 2024 wherein information regarding plans for a four-fold expansion of your company-owned store network by December 20, 2024 was disseminated. It is observed that the information was disseminated on the stock exchanges by you at 1:36 PM (BSE) and 1:41 PM (NSE) on December 2, 2024, it was announced beforehand on X (formerly Twitter) at 9:58 AM on December 2, 2024 by Bhavish Aggarwal, your promoter and CMD."
The regulator reprimanded Ola for not letting its investors know about its expansion plans before announcing it through other mediums. The letter read, “By failing to first disseminate the information on the stock exchanges and instead announcing it on a social media platform, you have failed to provide equal and timely access to information for all investors." The letter also warned Ola to avoid such violations in the future or face enforcement action.
Ola's tryst with controversy
Ola Electric has been mired in controversy since last year when thousands of customer complaints over its poor after-sales servicing led consumer watchdog Central Consumer Protection Agency (CCPA) to initiate an investigation. Ola was accused of alleged ‘violation of consumer rights, misleading advertisement and unfair trade practices’ after outrage on social media platforms. Since then, Ola Electric has not only seen its sales dip, but also its share prices drop. Ola Electric had filed its IPO in August last year as the first among Indian electric two-wheeler manufacturers.
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