Okinawa Autotech faces allegations of unpaid salaries, faulty deliveries amid mounting troubles
The electric two-wheeler maker, which has been dragged to court by the MHI for violating provisions of the FAME India Scheme, has allegedly not paid salaries to its employees since February this year.
Okinawa Autotech is facing worsening troubles as former employees allege unpaid salaries and dealers report faulty vehicle deliveries, highlighting significant financial and operational challenges for the electric two-wheeler company amid ongoing legal battles and regulatory scrutiny.
Preeti (name changed for anonymity), an employee with Okinawa, is yet to receive salaries for three months this year. This February, her salary did not get deposited and there was no prior warning from the company’s side about this.
“Our salaries get deposited on the 7th of every month. But that stopped last year when we got our November salary in December. That is when we knew something was wrong,” Preeti tells YourStory.
When she reached out to the human resources department in February to enquire about her salary, her emails went unanswered.
Finding it difficult to sustain without being paid for three months, she resigned in April. “I am yet to get my severance and full and final settlement,” she adds.
According to multiple former mid-level management employees YourStory spoke to, the company has not paid salaries to several employees for months, citing a cash crunch. One former employee claimed that they are yet to be paid salary for November last year and two other employees are to be paid salaries for three months this year.
While Preeti says she has not taken any legal action against the company till now, another employee said they are planning to act against the company.
If these troubles were not enough, Okinawa has allegedly also not paid some of its dealers yet, according to a former dealership owner.
“The company used to send in damaged vehicles to the dealership and when we tried to reach out to the company for parts to repair the vehicles to make it ready to be sold, they told us that they have no parts in stock at the moment.”
According to the dealership owner, some vehicles came in without a throttle or an accelerator. More times than not, the dealership had to personally source these parts to repair the vehicles, he says.
“One of our customers’ Okinawa scooters even caught fire at their home,” he alleges.
The dealership claims that it had to fight off angry customers who demanded refund or blamed the technicians at his dealership for selling faulty vehicles to them.
Struggling with the challenging circumstances, he resigned as an Okinawa dealer in December 2023. “It is heartbreaking what is happening at Okinawa for all dealers.”
Okinawa did not respond to YourStory’s questions regarding these allegations.
Okinawa was founded in 2015 by Jeetender Sharma and Rupali Sharma. It competes with other EV-makers, including newly-listed Ola Electric and IPO-bound Ather Energy.
FAME woes
The Indian government offers subsidies to EV manufacturers through various schemes, including the Electric Mobility Promotion Scheme (EMPS) and the Faster Adoption and Manufacturing of Electric Vehicles (FAME) scheme. These subsidies help EV firms gain a competitive advantage over fuel-run engines.
Okinawa was initially eligible for FAME. But a recent investigation conducted by the Ministry of Heavy Industries (MHI) found that the company—along with Hero Electric and a few others—was importing parts and not sourcing locally, as stipulated in the scheme. This was one of the criteria laid down by the government to discourage cheap imports from other countries, including China.
The government sent notices to these companies to return subsidies worth Rs 469 crore as they were flouting the norms. While some companies managed to return a certain amount to the government, Gurugram-based Okinawa, Hero Electric, and Benling India contested these claims and the de-registration order issued by the MHI in the New Delhi High Court.
In the court filing, Okinawa’s counsel argued that “due to lack of funds, the Petitioner (Okinawa Autotech International Private Ltd) is unable to carry on the production of its vehicles, and consequently, cash flow has come to a standstill.”
However, Okinawa has now been instructed to pay Rs 116.84 crore, which was disbursed under the scheme by MHI.
Interestingly, its subsidiary, Okinawa Scooters raised $2.04 million in seed funding on May 9 and has been valued at $97.9 million as of May, this year, according to data from Tracxn.
Mounting trouble
The legal tussles does not end here. In December 2023, tyre maker Ralson India filed a petition against Okinawa Scooters and Motorcycles, a subsidiary of Okinawa Scooters, in the National Company Law Tribunal's (NCLT) Chandigarh Bench for initiating a corporate insolvency resolution process (CIRP) against Okinawa for defaulting on payments.
According to Suraj Malik, Managing Partner and Founder at Legacy Growth, this means that if the petition gets admitted under the Insolvency and Bankruptcy code, Okinawa's business operations would come under the control of a Resolution Professional and the board/management will cease to have control.
The case is still ongoing and was adjourned in July with the next listing scheduled for August 29, according to the NCLT website.
Edited by Megha Reddy