Ola Electric Mobility Ltd, a prominent player in India’s electric vehicle sector, is currently navigating significant legal and operational challenges. On March 15, 2025, Rosmerta Digital Services Ltd, a key service provider responsible for vehicle registrations, filed a petition under Section 9 of the Insolvency and Bankruptcy Code (IBC) against Ola Electric’s wholly-owned subsidiary, Ola Electric Technologies Pvt Ltd. This petition, submitted to the National Company Law Tribunal’s (NCLT) Bengaluru Bench, alleges a default in payment for services rendered and seeks the initiation of a Corporate Insolvency Resolution Process (CIRP) against the subsidiary.
Background of the Dispute
The core of the dispute lies in alleged unpaid dues for services provided by Rosmerta Digital Services. While specific figures from Rosmerta Digital Services have not been publicly disclosed, reports indicate that Rosmerta Safety Systems, a sister company, is seeking nearly ₹2.5 crore in payments. Ola Electric Technologies, the subsidiary in question, is integral to Ola Electric Mobility’s operations, contributing substantially to the parent company’s revenue.
Ola Electric’s Response
In response to the insolvency petition, Ola Electric has stated that it is seeking appropriate legal counsel and “strongly disputes the claims made” by Rosmerta Digital Services. The company has expressed its intent to “take all necessary and appropriate steps to protect its interests and object to the allegations in the aforesaid matter.”
Operational Adjustments and Vendor Relations
Prior to the insolvency filing, Ola Electric had been renegotiating terms with its vehicle registration agencies, including Rosmerta Digital Services and Shimnit India Pvt Ltd, aiming to reduce costs and enhance registration process efficiencies. These negotiations were part of a broader strategy to optimize operations amidst a challenging market environment.
Impact on Vehicle Registrations
The renegotiation process has had a temporary impact on vehicle registration numbers reflected on the government’s VAHAN portal. Ola Electric acknowledged that due to ongoing negotiations and optimization efforts, registration figures for February 2025 were temporarily affected. However, the company emphasized that actual sales remained robust during this period and anticipated that registration numbers would stabilize in the subsequent weeks.
Financial Performance and Workforce Restructuring
Ola Electric has been facing financial headwinds, reporting a widened net loss of ₹564 crore in the fiscal third quarter, up from ₹376 crore in the same quarter the previous year. Revenue also declined by 19% year-on-year to ₹1,045 crore from ₹1,296 crore.
In response to these challenges, the company has initiated workforce reductions, reportedly affecting around 1,000 employees across various functions as part of a restructuring exercise aimed at reducing losses.
Regulatory Scrutiny and Compliance Issues
Adding to its challenges, Ola Electric has been under regulatory scrutiny. Investigations revealed that over 95% of Ola’s 4,000 showrooms lacked the necessary approvals to display or sell unregistered vehicles. This led to raids, shutdowns of outlets, vehicle seizures, and notices issued by transport authorities in multiple states.
Strategic Shifts and Future Outlook
In light of these developments, Ola Electric is undergoing strategic shifts to stabilize its operations and financial health. The company is moving its vehicle registration processes in-house, as announced by CEO Bhavish Aggarwal, to streamline operations and reduce reliance on external vendors.
Despite the current challenges, Ola Electric remains a significant player in India’s electric vehicle market, and its efforts to restructure and optimize operations are aimed at achieving long-term sustainability and growth.
Conclusion
The insolvency proceedings initiated by Rosmerta Digital Services against Ola Electric’s subsidiary highlight the complexities and challenges faced by companies in rapidly evolving industries like electric mobility. As Ola Electric navigates legal disputes, financial pressures, and regulatory scrutiny, its strategic responses and operational adjustments in the coming months will be crucial in determining its trajectory in the competitive electric vehicle market.