Ola Electric has found itself under the regulatory microscope yet again. This time, the Securities and Exchange Board of India (SEBI) issued a stern warning to the electric two-wheeler giant for violating disclosure norms by prematurely revealing its expansion plans on social media platforms before informing stock exchanges. The warning follows Ola Electric’s bold move to inaugurate 3,200 showrooms across India in a single day, as part of its ambitious plan to establish 4,000 outlets by the end of 2024. SEBI has cautioned the company against repeating such lapses, warning of potential enforcement actions if similar violations occur.
As a direct consequence of SEBI’s warning, Ola Electric’s shares took a hit, dropping by nearly 5% in early trading on January 8.
Violation of Disclosure Norms
SEBI’s objection stems from CEO and founder Bhavish Aggarwal’s announcement on X (formerly Twitter) on December 2, 2024, where he disclosed Ola Electric’s plans to expand its network ahead of filing the official disclosure with stock exchanges. According to SEBI’s warning letter, while Ola disseminated the information on BSE at 1:36 PM and NSE at 1:41 PM, the news had already been shared on social media at 9:58 AM—several hours earlier.
The regulator reprimanded the company for breaching fair disclosure guidelines. “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 read. SEBI has directed Ola Electric to adhere strictly to disclosure norms and warned of enforcement actions should the company breach them again.
A Rocky Road for Ola Electric
This latest warning is yet another setback for Ola Electric, which has been grappling with regulatory scrutiny and customer dissatisfaction. The company faced significant backlash in 2024 after receiving thousands of complaints about poor after-sales service, prompting an investigation by the Central Consumer Protection Agency (CCPA). Allegations of consumer rights violations, misleading advertisements, and unfair trade practices further tarnished its reputation.
The negative publicity impacted Ola Electric’s sales and share prices, putting pressure on the company as it prepared for its IPO filing in August 2024, becoming the first Indian electric two-wheeler manufacturer to go public.