500 Workers will be Laid Off by Ola Electric Due to Controversies and Subpar Performance

Nitin Konde, Varun Bhardwaj

Nov 23, 2024 — 2 min read

Ola Electric Announces Layoffs of 500 Workers Due to Controversies

The electric two-wheeler maker Ola Electric has restructured to reduce its workforce by roughly 500 employees due to concerns about its losses and after-sales service issues. According to the media, the exercise would affect workers at all levels and in all departments. In order to become profitable, the company managed by Bhavish Aggarwal wants to increase operational efficiency by cutting down on redundancies.

Employees from all departments will be impacted by the continuing exercise. The goal is to reduce costs in order to increase margins and profitability. According to additional sources, there is no deadline for finishing the exercise. In the second quarter of the current fiscal year, Ola Electric reported a net loss of INR 495 Cr (Q2 FY25). Although the year-over-year (YoY) loss decreased by 5.5%, it increased by 43% from INR 347 Cr in the first quarter of FY25. Ola Electric stated in its quarterly investor presentation that it would prioritise enhancing its bottom line through margin gain investments. Aggarwal, the business's founder and CEO, stated during a post-earnings call that the company anticipates maintaining a steady operating expense level or possibly a modest decrease over the following two quarters. He said that as the business expands its distribution, revenue would continue to rise and operational costs will essentially remain the same or possibly decrease over the coming quarters.

Current Workforce and Financial Dynamics of Ola Electric

By the end of FY24, Ola Electric had more than 4,000 employees on the payroll, according to its red herring prospectus. In Q2 FY25, the company invested INR 139 Cr in its workforce, a 23% YoY and 13% quarter-over-quarter increase. It's important to remember that in June of this year, it was reported that Ola Electric intended to reduce its employment by 400–500 employees in an effort to streamline its business before going public.

Additionally, within the past two years, it has carried out comparable reorganisation operations twice. The most recent exercise takes place during a period of months in which Ola Electrics' stock has been steadily declining. On November 21, the company's shares fell more than 12% from their listing price of INR 75.99 to a new all-time low of INR 66.85.

Ola’s Tug of War with Government’s Agencies

Growing complaints regarding the company's e-scooters coincide with the stock's downturn. The Central Consumer Protection Authority (CCPA) reportedly began a thorough inquiry into the company's customer complaints last week. Ola Electric received a show-cause notice from the CCPA last month in response to user concerns.

After that, the business reported that 99.1% of the 10,644 complaints had been settled to the full satisfaction of the client. According to reports in November, the CCPA determined that Ola Electric's assertions were untrue.