PC: Business Today
This is a big win for India’s electric vehicle sector as Ola Electric Mobility Ltd has resolved its financial dispute with vehicle registration service provider Rosmerta Digital Services Ltd. However, Ola Electric has to pay a resolution involving the payment of ₹26.75 crore (about $3.1 million) to Rosmerta, to ensure the withdrawal of insolvency proceedings filed against Rosmerta.
Background of the Dispute
Earlier this month, Ola Electric Technologies Pvt Ltd, the wholly owned subsidiary of Ola Electric Mobility Ltd, had filed a petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 against Rosmerta Digital Services. It was in the NCLT’s Bengaluru Bench in the petition filed prior to the National Company Law Tribunal that it alleged default in payment of services rendered and attempted to invoke Corporate Insolvency Resolution Proceedings.
Settlement Details
Following the settlement, Rosmerta Group filed a memo for the withdrawal of the petitions before the NCLT, effectively resolving the matter. Ola Electric emphasized its commitment to fulfilling obligations and maintaining professional relationships with all stakeholders. In a media statement, Rosmerta Group confirmed the receipt of the full claimed amount and indicated that no further causes of action exist between the parties.
Market Reaction and Financial Implications
Despite the resolution, Ola Electric’s shares experienced volatility. On the day of the announcement, the stock traded 1% lower at ₹55.15 apiece on the National Stock Exchange (NSE). Since its listing in August 2024 at an IPO price of ₹76, the stock has declined approximately 27%, reflecting ongoing investor concerns.
Operational Challenges and Strategy
MeasuresIt was in the midst of broader operational challenges for Ola Electric. In November of 2024, the company began an operation and expenditure reduction program, intending to decrease expenses and increase client experience. According to the report this initiative has enabled reduction in sustainable cost of ₹90 crore each month, thereby positioning the automotive division to potentially achieve EBITDA breakeven in first quarter of the ensuing financial year.
Conclusion
This amicable resolution between Ola Electric and Rosmerta Group is another pearl of examples proving that corporates should always resort to collaborative solutions to handle monetary differences among themselves. As Ola Electric moves its Evans Electric Charters service into electric vehicles while working in the emerging electric vehicle market, it will be imperative for them to maintain robust relationships with service providers and stakeholders to continue growing and establish the market position.
