L&T, Ola Electric, YesMadam: How Reputation Drives Real-World Results

The modern business landscape is a minefield of potential pitfalls, and even seemingly minor missteps can devastate a company's reputation and financial performance. 

Recent events involving comments by the top leadership of L&T and Ola Electric are stark reminders of the importance of reputation. To assess the impact of PR missteps on news sentiment and stock prices, Impact Research & Measurement Pvt. Ltd. (IRMPL) conducted an exclusive analysis of three companies: L&T, Ola Electric, and YesMadam for PRmoment India.

Crises analysed using an AI model 

- L&T chairman SN Subrahmanyan's controversial comments on a 90-hour work week.

- Ola’s Bhavish Aggarwal and comedian Kunal Kamra's Twitter dispute over service quality issues.

-YesMadam’s marketing stunt on supposed mass layoffs following a work stress survey.

Crisis 1: L&T Chairman’s 90-Hour Work Week Comment

The coverage of L&T chairman SN Subrahmanyan's 90-hour work week comment impacted the company's media reputation and share prices. This demonstrates the real-world impact of reputation on a company's performance.

Impact on Share Prices

L&T's shares saw a decline following the controversy. There was a drop of 1.71% on the day the controversy broke, 4.53% over the five days that followed, and a more significant dip of 9.89% over the month.

Interestingly, on the back of news about strong Q3 earnings, record large deal bookings, and the launch of a second multi-purpose vessel for the Indian Navy by L&T Technology Services (LTTS), a subsidiary of L&T, L&T shares surged 10% between 15th and 16th January, following this positive news. 

This reflects the nature of market sentiment and its influence on share prices.  The market reacted positively to news of  LTTS's business success and shook off the impact of the negative news cycle.

Media Coverage and Reputation

Let's take a look at how the news cycle behaved. Before L&T's chairman's comments, only 9 % of the stories on L&T were unfavourable, and only three mentioned the chairman.

News Sentiment Changed Dramatically, From 1st to 16th January 2025:

• 63% of the stories now mentioned the chairman
• 66% of the stories were unfavourable, of which 95% were due to the chairman’s comments.

• Celebrities like Deepika Padukone and Jwala Gutta and business leaders such as Anand Mahindra and Harsh Goenka publicly criticised Subrahmanyan’s comments. Some even suggested renaming L&T to "Lynch and Torment" to reflect the company's perceived harsh work culture.

L&T defended Subrahmanyan’s comments as reflecting the company’s commitment to nation-building and the need for extraordinary efforts to achieve exceptional outcomes. 

The company’s HR head also defended Subrahmanyan, claiming his remarks were casual, misinterpreted, and taken out of context. As expected this approach too faced criticism.

Crisis 2: Ola’s Bhavish Aggarwal and Comedian Kunal Kamra X (Formerly Twitter) War Over Service Quality Issues

Before the Bhavish-Kunal spat 14% of the stories were unfavourable in the period 28^th September to 13^th October 2024.

Comedian Kunal Kamra brought to light customer complaints about Ola Electric's service quality. Kamra's tweet, featuring a photo of numerous Ola scooters parked outside a dealership, criticised the company's inadequate service centres and lack of refunds for dissatisfied customers.

Aggarwal responded by accusing Kamra of posting a “paid tweet,” further escalating the situation and drawing negative attention to the company.

Impact on Ola's Stock Market Performance

After this exchange, 52% of the stories were unfavourable, of which 48% were due to the spat. Overall 28% of the stories mentioned the Bhavish-Kunal spat.

Durgesh Garg (VP – of operations) at Impact Research & Measurement Pvt. Ltd. (IRMPL) shared, "This public spat, coupled with existing customer complaints about after-sales service, refunds, and the availability of service centres, sparked widespread criticism online and led to a decline in Ola Electric's share prices. Ola Electric shares dropped by 8% the day after the spat, marking three consecutive days of losses for the company."

Additionally, added Garg, "The incident invited greater scrutiny from regulators and the media, further pressuring the company. The CCPA issued a show-cause notice to Ola Electric for alleged violations of consumer rights, misleading advertisements, and unfair trade practices due to mounting consumer complaints. This regulatory action further eroded investor confidence and contributed to the decline in share prices."

Apart from the Bhavish Aggarwal-Kunal Kamra spat, other developments that severely impacted Ola Electric's share prices include:

• A show-cause notice from the Central Consumer Protection Authority (CCPA): The CCPA issued a show-cause notice to Ola Electric for alleged violations of consumer rights, misleading advertisements, and unfair trade practices due to mounting consumer complaints. This regulatory action further eroded investor confidence and contributed to the decline in share prices.
• Intensifying competition: Ola Electric is facing increasing competition from established automakers like Bajaj Auto and TVS Motors, who are rapidly expanding their presence in the electric vehicle market. This competition is putting pressure on Ola Electric's market share and profitability, further impacting its share prices.
• Declining Sales: Ola Electric's e-scooter sales declined for the second consecutive month, reaching its lowest sales total for 2024 in September. The decrease in sales is attributed to heightened competition and the company's inability to address customer service issues effectively.
• Investigations by the Heavy Industries Ministry and the Road Transport Ministry: Following the CCPA notice, the Heavy Industries Ministry tasked the Automotive Research Association of India (ARAI) to investigate consumer complaints and verify if Ola Electric is honouring warranties and maintaining the required service centers. The Road Transport Ministry also initiated investigations into the company. This heightened government scrutiny further added to investor concerns and contributed to the decline in Ola Electric's share prices.

Overall, the combination of negative publicity, regulatory scrutiny, declining sales, intensifying competition, and investigations stemming from customer complaints, including the Bhavish Aggarwal-Kunal Kamra spat, has created a challenging environment for Ola Electric, leading to a significant decline in its share prices.

Crisis 3: YesMadam’s mass layoffs marketing stunt

The story is now well-known. In December, at-home beauty service firm YesMadam stated that it was laying off employees after an internal survey identified staff experiencing stress at work. It turns out it was a marketing stunt.

Here is the media coverage and sentiment before and after the event horizon:

83 websites generated 256 stories on YesMadam from 1^st to 16^th Dec 2024.

• Period before mass firing over work stress survey
  • Media did not report any story on YesMadam
• From the day, mass firing news published in the media
  • 83 websites provided 256 stories
  • 99% of the stories were on mass firing
  • 70% of the stories were unfavourable – all due to mass firing

The YesMadam layoffs had a significant negative impact on the company’s media reputation, leading to widespread criticism and accusations of unethical behaviour:

• In response to the backlash, YesMadam said the incident was a planned social media campaign to raise awareness about workplace stress. The company apologized for any distress caused and stated they would never fire employees for being stressed.
• As part of its damage control efforts, YesMadam introduced a "Happy 2 Heal" program and a "De-Stress Leave Policy," offering employees six paid leave days annually for mental health recovery. This move resulted in an uptick in positive stories as seen in the graph above.

Vikrant Tripathi, manager - research & analysis, Impact Research & Measurement Pvt. Ltd. (IRMPL), said, “From the L&T Chairman's 90-hour work week remark to Ola Electric's public spat over service quality and YesMadam's controversial layoffs, these incidents underscore the critical importance of ethical leadership, employee well-being, and customer satisfaction in today's business landscape.

Our research reveals how these crises not only eroded public sentiment but also directly impacted investor confidence and share prices, with listed companies like L&T and Ola Electric witnessing tangible declines. The findings emphasize the growing influence of media and social sentiment in shaping corporate reputation and market performance.

These case studies serve as a stark reminder for organizations to adopt transparent, empathetic, and responsible practices to safeguard their reputation and build trust with stakeholders.”

Research Methodology 

The analysis, using an AI model was based on English-language online news coverage tracked by IRMPL over 16 days, including the day the crises were first reported in the media.