Ola Electric, Bhavish Aggarwal Seek SEBI Settlement Over Misleading Disclosure Allegations

Ola Electric and its founder-chairman Bhavish Aggarwal have approached the Securities and Exchange Board of India (SEBI) to settle proceedings linked to allegations that the company disseminated false and misleading information that may have inflated its stock price.

The settlement application was filed on 23 April, following a show-cause notice issued by SEBI on 10 April, and seeks to resolve the matter without admission or denial of facts and legal conclusions. The allegations cover misleading disclosures on service network expansion, sales performance and electric motorcycle rollout timelines.

The regulator’s notice followed investigation into the disclosures made by Ola Electric between the time of its listing in August 2024 and May 2025, during which SEBI alleged violations of the Prohibition of Fraudulent and Unfair Trade Practices Regulations and the Listing Obligations and Disclosure Requirements Regulations. Ola Electric has said it has detailed explanations for the allegations but is seeking an amicable closure to avoid prolonged litigation.

The Service Network Claims

A key part of the case relates to Ola's announcement that it would expand its store network to 4,000 locations by 25 December 2024, with more than 3,200 new stores co-located with service centres. SEBI said this was at odds with the actual operational footprint of the company. Subsequent data submitted to the regulator showed that 452 co-located outlets were operational as of February 19, 2025, against 429 at the time of the IPO.

This means that only 23 additional service centres had actually been added since listing. Ola repeatedly highlighted this expansion through exchange filings and social media, including statements from Aggarwal saying all stores had service capacity,SEBI noted. The regulator noted that Ola’s shares jumped 8.45% intraday on December 2, 2024, with trading volumes peaking, suggesting investors reacted positively to the announcement.

Sales Figures Under Scrutiny

SEBI also questioned Ola’s February 2025 disclosure claiming sales of over 25,000 electric two-wheelers and a market share above 28%. The investigation found that the cited figure of 25,207 represented confirmed customer orders rather than actual sales. Of these, only 5,341 vehicles were registered and revenue was recognised on just 2,848 vehicles.

SEBI alleged that Ola switched from reporting registrations to reporting orders without adequately disclosing the change. It also flagged claims that nearly 90% of orders were fully paid, while the regulator's findings showed advance payments accounted for about 68% of total order value, with only 61% of orders having received payments exceeding 90%. Separately, 3,333 orders were later cancelled, including 2,560 by April 2025, without disclosure.

The Roadster Allegations

A third set of allegations concerns the Roadster motorcycle programme. SEBI alleged Ola failed to adequately disclose delays and pending prototype approvals despite committing to deliveries by March 2025. The regulator also alleged that Ola announced Roadster X deliveries had commenced in May 2025, even though no deliveries took place that month. Aggarwal later acknowledged that deliveries had only begun in June.

SEBI has held Aggarwal responsible in his capacity as promoter, managing director and the company's sole executive director, alleging he amplified the disputed claims through corporate communications and social media.

What happens next

In the settlement application, Ola Electric and Aggarwal reserved their right to contest the allegations on merits but offered to settle any possible proceedings on payment of a settlement amount to be determined by SEBI. They have also sought a hearing before the internal committee of the regulator under the settlement framework.

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Ola’s stock has tumbled sharply over the past year, trading well below its IPO price of ₹76. The company’s market capitalisation has shrunk to ₹20,400 crore, with shares trading near ₹43 to ₹44 currently, a huge drop from its post-IPO peak of over ₹140 in August 2024. Based on Vahan registration data, the company holds a market share of about 9%. Earlier this month, Ola also launched a qualified institutional placement to raise up to ₹500 crore, with a floor price of ₹37.74 per share.

Source:

Economic Times