Ola Electric Shares Decline Amid Expanding Raids Over Trade Violations
Click to start listening
Synopsis
Ola Electric's stock fell by 4.05% to Rs 51.64 amid regulatory scrutiny and fresh raids on its stores in Madhya Pradesh and Maharashtra for trade violations. Authorities inspected multiple locations for compliance with trade certificate requirements, leading to significant challenges for the company amidst questions over its reported sales figures.
Key Takeaways
- Ola Electric's stock dropped 4.05%.
- Raids conducted in Madhya Pradesh on multiple stores.
- 14 scooters were impounded during inspections.
- Concerns raised over reported sales figures.
- Insolvency proceedings initiated against a subsidiary.
New Delhi, March 20 (NationPress) Following the emergence of regulatory scrutiny and new raids on its outlets, Ola Electric witnessed a significant drop in its stock price as shares plummeted by 4.05 percent to Rs 51.64 each on the Bombay Stock Exchange (BSE).
The challenges for the electric vehicle manufacturer intensified when authorities in Madhya Pradesh conducted inspections at its stores.
Reports indicate that at least six Ola Electric locations were examined -- two in Jabalpur and four in Indore -- on March 12 and March 18. These stores were allegedly selling electric scooters without the necessary trade certificates.
During the inspections, officials confiscated 14 scooters in Jabalpur, while no vehicles were taken in Indore. The stores involved received a three-day notice to clarify the violations, according to reports.
The scrutiny of Ola Electric outlets in Madhya Pradesh followed similar raids in Maharashtra. Over the last three days, officials from five regional transport offices inspected 26 Ola Electric stores in Mumbai and Pune.
Some of these stores were discovered to be operating without trade certificates, while others utilized a single certificate across multiple locations, which is prohibited.
As per the Central Motor Vehicles Act, 1988, and associated regulations, every vehicle distributor or manufacturer is required to obtain a business certificate to register and sell vehicles.
Showrooms and dealerships must also possess distinct trade certificates for each location. Breaches of these regulations may result in penalties under Section 192 of the Motor Vehicles Act.
The Ministry of Heavy Industries has intervened, requesting clarification from Ola Electric regarding discrepancies between its reported sales figures and actual vehicle registrations.
Compounding the company's difficulties, doubts have arisen concerning the accuracy of its reported sales numbers.
In February, Ola Electric asserted it had sold 25,000 scooters, yet only one-third of these were genuinely registered.
These inspections occur at a time when Ola Electric is grappling with declining sales, as the latest VAHAN data indicates that March sales have not shown considerable improvement.
Last week, vendors Rosmerta Digital Services Private Limited and Rosmerta Safety Systems Private Limited initiated insolvency proceedings against the company's subsidiary over unpaid debts totaling approximately Rs 25 crore.
These vendors were responsible for processing vehicle registrations and producing high-security registration number plates for Ola's electric scooters.
