Days after Ola Electric’s statutory auditor flagged a serious internal control lapse at the company’s subsidiary Ola Electric Technologies, the electric vehicle maker has clarified that the matter represented an isolated case and does not reflect broader issues within the company.
In Q4FY25, the Bhavish Aggarwal-led company redesigned its network operations to enhance operational and cost efficiency. As part of this initiative, there was a “temporary” re-alignment of inventory processes, which the statutory auditor flagged.
Ola Electric clarified that the internal control lapses flagged by the auditor pertained to an isolated transaction, where the physical verification of Ola Electric Technologies’ inventory could not be conducted due to the ongoing re-alignment.
Furthermore, the electric scooters’ maker remarked that the validation of physical inventory was ensured through a review of ERP (Enterprise Resource Planning) system data, which reported no discrepancies.
“Every unit manufactured by the Company is electronically traceable and trackable through a unique Vehicle Identification Numbers (VIN). Further, no sales of Scooters can be made without registering it and reporting in the Vahan portal,” Ola Electric said.
It further stated that there was no element of misplacement in inventory and therefore, no financial impact on the company.
What did Ola Electric’s Auditor Say?
This clarification comes after BSR & Co. LLP, the statutory auditor for Ola Electric, raised alarm over “material weakness” in the subsidiary’s internal control systems that prevented proper physical verification of its e-scooters and raw material at the company’s stores and its state distribution centres.
This failure, cited by BSR for FY25, could lead to potential misstatements across key financial parameters, including change in inventories of finished goods and cost of materials consumed, among others.
The auditor also revealed gaps in Ola Electric’s inventory reporting. For instance, Ola Electric’s inventory totalled Rs 367 crore for the quarter ended December 2024 as per its books. However, when it filed returns with Bank of Baroda, it reported that its inventory was Rs 341 crore for this very time period.
BSR also identified at least two instances of discrepancies in inventory reporting to different banks for the same quarter.
In one such case, while filing returns for the quarter ended September 2024, Ola Electric reported inventory worth Rs 320 crore to Bank of Baroda, but declared Rs 361 crore in inventory to Yes Bank for the same timeframe.
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Troubles Mount For Ola Electric
The auditor’s concerns on inventory control come at a time when Ola Electric is grappling with mounting losses. In Q1FY26, the Aggarwal-led company reported a consolidated net loss of Rs 428 crore, up 23% from a Rs 347 crore loss in the same quarter last year.
Meanwhile, its revenue from…
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