The stock of Ola Electric has taken an important hit, falling about 8% on Monday (March 17). The stock was terminated at Rs 46.86, marking the decline of 7.23%. The decline follows a bankrupt petition against Ola Electric Technology Private Limited, one of the company’s subsidiaries, which is by high-protection number plate manufacturer Romarta Digital Services Limited.
Ola Electric Faces Legal Troubles and Bankruptcy Petition
Legal issues include three companies: Ola Electric Mobility, its subsidiary Ola Electric Technology Private Limited, and Rosmarta Digital Services Limited ROMarta Digital, which manufactures high-protection number plates, has accused the Ola Electric Technology Private Limited to fail to pay Rs 18-20 crore for the services rendered on the Ola Electric Technology Private Limited. As a result, Romarta Digital has filed a petition in the Bengaluru Peeth of the National Company Law Tribunal (NCLT), seeking to initiate bankruptcy against the subsidiary.
In response, Ola Electric denied the allegations, stating that it is taking legal advice and intends to contest the claims strictly.
Raids on Ola Electric Showrooms: Regulatory Challenges
On March 8, there were reports of raids on some Ola showrooms. Transport officials closed many showrooms and confiscated vehicles due to lack of trade certificates. Along with this, a show cause notice was also issued to the company by the Transport Department.
Ola Electric has opened 4,000 showrooms since 2022. According to the report, data is available for only about 3,400 of these showrooms. Out of 3,400, only 100 showrooms had the necessary trade certificates under the Motor Vehicles Act.
More than 95% of the company’s showrooms do not have the basic certification required to display, sell and offer test rides of unregistered two-wheelers.
Ola Electric to Lay Off Employees Amid Cost-Cutting Measures
Earlier, news had come that Ola Electric will lay off more than 1,000 employees and contract workers. Through this, the company wants to reduce its increasing losses.
This job cut will affect several departments including procurement, fulfillment, customer relations and charging infrastructure. People familiar with the matter had said that this layoff is part of Ola Electric’s efforts to control costs.
Ola Electric’s Stock Performance: A 70% Drop From Peak
After the listing of shares in August 2024, Ola’s stock has fallen by about 70% from its peak of Rs 157.53. The company’s shares have fallen by about 20% in the last one month. Apart from this, by December 2024, the company’s market share has come down from 49% to 23%.
