Some 80,000 customer complaints a month about faulty scooters, and a customer frustrated enough to torch a showroom last month, is the kind of stuff that would put a company in fire-fighting mode, while its stock price plummeted. But we live in strange times where companies, even in such deep mess, can use their deep pockets to buy ‘influence’ and suppress criticism in social media.
It, finally, took an arrogant, brattish outburst from Bhavish Aggarwal, founder, chairman and managing director (CMD) of the loss-making Ola Electric Mobility Ltd (Ola Electric) to trigger an avalanche of criticism that, finally, caused the stock to plummet 8.3% (to Rs90.82) on 7th October. The drama began on Sunday when celebrated stand-up comedian Kunal Kamra tweeted about the company’s poor response to customer complaints and tagged the @jagograhakjago the consumer helpline of the ministry of consumer affairs and Union minister Nitin Gadkari to provoke regulatory action.
Post:
Do indian consumers have a voice? Do they deserve this? Two wheelers are many daily wage workers lifeline…@nitin_gadkari is this how Indians will get to using EV’s? @jagograhakjago any word? Anyone who has an issue with OLA electric leave your story below tagging all… https://t.co/G2zdIs15whpic.twitter.com/EhJmAzhCmt
Mr Kamra has 2.4mn (million) followers; a number that is serious enough to warrant a measured response from the head of a listed company, accountable to customers as well as shareholders on how he intends to deal with the massive problem of defective scooters. Mr Aggarwal did the opposite. Calling Kunal Kamra a failed comedian and ascribing financial motives to his post, Mr Aggarwal falsely boasted that Ola had ‘enough programs for our customers if they face delay’. In a matter of minutes, the timelines of both protagonists exploded with flaming reactions exposing all that was wrong with the company and its product.
Ola Electric launched the ‘Ola S1’ and ‘S1 Pro’ scooters with great fanfare in August 2021, promising a new era of sustainable urban mobility. There were concerns about the battery and charging infrastructure, even then, which remained unaddressed (Read: Ola Scooter: iPhone or Nano of Personal Transport?). But the reality has been worse than anticipated. The scooters have been plagued by other problems such as frequent breakdowns (brake, suspension and motor failures have been reported) and battery malfunction causing some vehicles to catch fire. Customers complained that the S1 Pro fell far short of its claimed battery range of 181km and even the smart dashboard was glitchy. But the biggest problem was the absence of a robust service network to deal with the large number of complaints.
Narrative Control
The issues at Ola Electric reflect several broader concerns. Chief among them is how well-funded start-ups are able to control public and media narrative by leveraging their massive financial backing of investors seeking aggressive growth, often, at any cost.
We have seen this happen with several high profile start-ups which received glowing coverage in mainstream, digital and social media right until they burnt out in the bonfire of consumer complaints, lawsuits and regulatory action.
Controlling the public narrative through influencers and advertisements has two benefits: customers are fooled into buying bad products and investors are persuaded to buy or hold on to the stocks. The two factors maintained Ola Electric’s stock price right until Monday. The stock debuted at Rs76 on 9th August this year and closed the day at Rs91. It peaked at Rs146 on 19th August and has remained at almost Rs100, right until this debacle caused a crash.
Governance Issues
Whizkid founders of unicorns like Ola Electric, often, have disproportionate control over the company’s operations and communications. Mr Aggarwal’s immature and scornful response to Kunal Kamra underscores this, also highlighting the absence of internal checks, failure to respond appropriately to a crisis. This reveals a troubling lack governance structure that should hold the brash CMD more accountable to shareholders and customers.
And yet, Ola Electric boasts a glittering board comprising Arun Sarin, Krishnamurthy Venugopala Tenneti, Manoj Kumar Kohli, Ananth Sankaranarayanan and Shradha Sharma. It would be interesting to know if the board had ever taken note of the staggering number of customer complaints and the founder’s disdainful reaction to customers’ issues after being called out.
Amit Tandon, founder and managing director (MD) of Institutional Investor Advisory Services (IiAS), a proxy advisory firm, says, “Newly listed companies and their founders need to understand the terms of operating in the public markets space. They need to avoid an immediate reaction but rather respond in a manner that befits a listed company. With social media allowing easy access to founders and promoters, their response to public comments and complaints must be carefully thought through.”
Consumer Complaints
While nervous investors voted with their feet on Monday, India’s weak enforcement of consumer protection ensured that buyers got no relief. “In any other country there would have been million-dollar lawsuits, not to mention criminal cases,” says advocate Murali Neelakantan. But Indian customers are stuck with slow consumer courts and a class action mechanism that is deliberately made unworkable.
The sheer numbers ought to have attracted suo moto action from the ministry of consumer affairs, especially since Ola EVs enjoy substantial subsidies at the cost of the taxpayer. As far back as November 2023, the news agency Reuters had done a nationwide report (https://x.com/RishikaSadam/status/1729895225072771495 ) on mounting consumer complaints and 100s of bikes gathering dust as they waited to be repaired. The extreme reaction of the customer who torched an Ola showroom is indicative of frustration at the absence of proper redress or compensation.
Consumer activist Abhay Datar points out that the Consumer Protection Act 2019 has provisions for replacement or refund of money in situations like this. But consumers have been left in the lurch while the company continues to promise some relief through a ‘new service team’ without putting a timeframe to resolve complaints.
Meanwhile thousands of customers across India have posted photos, videos and details of their experience without eliciting any response from the government. The saving grace is that new sales have declined drastically in August as complaints mounted, but the company has already sold 680,000 electric scooters since inception.
The Kamra-Aggarwal spat brings home the fact that, beyond the fanfare of innovation and technology-driven Indian start-ups, there is a need to focus on long-term sustainability, better governance and respect for consumers' rights. This can only happen if the board exerts control. But whether it is PayTM, Byjus, Zilingo or Ola Electric, the boards have been found to be surprisingly passive.
Meanwhile, amidst rising complaints and share price drops, Ola Electric has received a show-cause notice (SCN) from the central consumer protection authority (CCPA) due to increased consumer complaints. The SCN cites alleged violations of consumer rights, misleading advertising and unfair trade practices.
In a regulatory filing, Ola Electric says, "The Company has received the SCN vide email on 7 October 2024. The Company will file a reply to the SCN before the CCPA. Currently, the SCN has no impact on the financial, operational or other activities of the company. Furthermore, the SCN, which is issued by the CCPA, does not impose any penalties or financial fines." (Read: Ola Electric Gets Notice from Consumer Protection Authority on Misleading Ads, Unfair Trade Practices)
Comments
sukant.0106
1 month ago
He sleeps 20X7 and works 4X7 oh sorry i think it's the opposite of what it is, whatever, he must sleep well, have good relations with his company men and customers, on whose shoulder only he will see success and wealth. The current despensation ant center has marshalled this brash attitude of "Paise ke liye,Kuch bhi karega". He must work on WL Balance also, this will keep him sane.
Great example of how ego can cause destruction.
Whether you are are a leader of a political part or a corporate, any egoistic statement specially against public can destroy career.
Long way to go and lot to learn.
Wonder what would have happened had Mr. Kamra and unsatisfied customers blow off the lid before the IPO opened for subscription. They would have done a great service to the general public.
Time and again it is proved how these brash promoters ruin a organization through cultivated arrogance through easy money poured in by investors on the back of promises made about their innovative technologies which later prove to be only eyewash since the promoters are interested only in short term benefits ably backed by spineless board , weak governance structure and poor laws and regulations which help these Charlies to get away with investors money.
While entrepreneurship needs to be encouraged and there will be gaps, glitches and mistakes when newer technology adaptions are taking place, but the kind of outburst that Bhavish Aggarwal restored to Kunal Kamra's tweet just blew up Ola Electric's credentials.
Humility and not displaying arrogance would have served best for the customers, the shareholders and even for Kamra, whose popularity would not have soared as it did.
From the widely shared 80k complaints, the NCH and CCPA are now talking about 10k complaints, which is a fairly steep drop. Meanwhile, I know up-close and personal, 2 people who are buying their 2nd Ola EV scooter and the delivery persons who serve our area have a base about 2kms away, with multiple different EV-2W and EV-3Ws. Almost all of them are replacing ICE vehicle with EVs.
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Whether you are are a leader of a political part or a corporate, any egoistic statement specially against public can destroy career.
Long way to go and lot to learn.
Humility and not displaying arrogance would have served best for the customers, the shareholders and even for Kamra, whose popularity would not have soared as it did.