Bhavish Aggarwal’s EV venture grapples with vendor payment dispute amid cost-cutting drive.
March 17, 2025
In a surprising turn of events for India’s leading electric two-wheeler manufacturer, Ola Electric Mobility Ltd disclosed on Friday that its wholly-owned subsidiary has been slapped with an insolvency petition by one of its service providers.
Rosmerta Digital Services, which handles vehicle registration processes for the EV maker, has approached the National Company Law Tribunal (NCLT) in Bengaluru, alleging payment defaults by Ola Electric Technologies Private Limited.
The petition, filed under Section 9 of the Insolvency and Bankruptcy Code, seeks to initiate corporate insolvency resolution process (CIRP) against the Ola subsidiary. This legal challenge comes at a critical juncture when the Bhavish Aggarwal-led company is actively renegotiating contracts with its vehicle registration agencies.
“We strongly dispute these claims,” Ola Electric stated in an exchange filing, adding that it has sought appropriate legal advice and “will take all necessary steps to protect its interests.”
Troubled Partnership Amid Cost-Cutting Drive
The insolvency petition emerges just weeks after Ola Electric publicly announced it was revising agreements with Rosmerta Digital Services and Shimnit India Private Ltd as part of its broader cost reduction strategy.
In February, the EV maker cautioned investors that this contract renegotiation would “temporarily affect” vehicle registration numbers on the VAHAN portal. The company assured stakeholders that “sales continue to be strong” despite the anticipated dip in registration figures.
Industry analysts view this dispute as a potential fallout of Ola’s aggressive cost-cutting measures. Last week, the company claimed successful implementation of its “Network Transformation and Opex Reduction Program,” boasting monthly savings of Rs 90 crores.
Direct-to-Consumer Model Under Scrutiny
Unlike traditional automakers that operate through dealership networks, Ola Electric employs a direct-to-consumer approach with company-owned stores. This business model relies heavily on third-party agencies like Rosmerta and Shimnit to handle vehicle registration processes across various regions.
“This dispute highlights the challenges in Ola’s unique business model,” notes Vikram Mehta, an automotive industry consultant. “While direct-to-consumer strategies can cut distribution costs, they often create new dependencies on specialized service providers.”
The timing couldn’t be more challenging for Ola Electric, which recently announced plans to achieve EBITDA breakeven in its automotive division by the first quarter of the next financial year.
As the dispute heads to court, all eyes will be on whether this vendor conflict disrupts Ola’s ambitious growth plans in India’s increasingly competitive electric two-wheeler market.
