Ola Electric's auditor flagged the reversal of a ₹57 crore PLI-related penalty provision
MHI had not formally approved the requested deadline extension and waiver by June 30
Ola's Q1 loss narrowed to ₹336 crore, while revenue fell 45% year-on-year
Shares of Ola Electric Mobility Ltd fell as much as 5% on Monday after the company's auditor flagged the reversal of a ₹57 crore provision related to potential penalties under the government's production-linked incentive (PLI) scheme.
BSR & Co., the Indian affiliate of KPMG, said it could not determine whether the accounting treatment was justified as Ola had not received formal approval from the Ministry of Heavy Industries (MHI) for an extension of the investment deadline and waiver of liquidated damages, as per Mint.
1 August 2026
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The provision had been created by Ola Cell Technologies Pvt. Ltd (OCTPL), a subsidiary of Ola Electric, after it missed an investment milestone under the PLI scheme.
The company had been selected in 2022 to establish 20 GWh of lithium-ion cell manufacturing capacity, but subsequently limited the planned capacity to 6 GWh.
Ola reversed the entire ₹57 crore provision in the June quarter after applying to MHI for an extension and waiver. The company said it was confident of securing the approval based on its discussions with the ministry.
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"During the current quarter, OCTPL has filed for a request for extension of timeline and waiver of liquidated damages, to MHI in respect of meeting the milestones, and has not created any further provision in this respect from April 01, 2026," Ola said in its earnings notes, as per Mint.
"Further, based on the various discussions with MHI, the company is confident of obtaining the approval from the MHI and, accordingly, has written back the entire existing provision," it added.
However, as approval had not been received by June 30, the auditor said it was unable to obtain sufficient evidence to establish whether the reversal was appropriate.
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According to the report by Mint, the move appeared to be an example of aggressive accounting and could become a bigger concern if the company continued the treatment in its FY27 annual accounts without receiving MHI approval.
The auditor would need sufficient evidence to determine whether the accounting treatment was correct, adding that the qualification alone did not establish that the accounting was wrong, the report said.
Loss Narrows; Revenue Falls
Ola Electric reported a consolidated net loss of ₹336 crore for the June quarter, compared with ₹428 crore a year earlier.
Without the ₹57 crore reversal, the loss would have been ₹393 crore.
Revenue declined 45% year-on-year to ₹455 crore.
The auditor's observation comes as Ola Electric continues to face pressure on its business performance.
Shares Fall After Auditor's Observation
Ola Electric shares fell as much as 5% in Monday's trading session as investors reacted to the company's June quarter results and the auditor's qualification.
Ola Electric was trading around ₹40.50 apiece at 11:05 am on on NSE Monday.
None of the eight analysts tracking the stock currently has a 'buy' rating. Two have a 'hold' rating, while six have recommended 'sell', as per CNBC-TV18.
Kotak Institutional Equities has a 'sell' rating with a ₹20 price target, citing concerns over the sustainability of volume recovery, weak brand equity and the company's free cash flow position. Goldman Sachs has a 'neutral' rating with a ₹40 target.
Since its August 2024 listing, the company's shares have fallen 46%, while its market share has declined from about 35% in FY24 to 8% in June 2026, as per Mint.
