Ola Electric Subsidiary Reverses Rs 57 Crore Penalty Provision After Missing an Investment Milestone under PLI Scheme :

Ola Electric’s subsidiary, Ola Cell Technologies Private Limited (OCTPL), has reversed a provision created for a Rs 57 crore penalty after missing an investment milestone under the government’s Production Linked Incentive (PLI) scheme. The company said it is confident that the Ministry of Heavy Industries (MHI) will approve its request for an extension and waiver of liquidated damages.

An auditor in its report said that "OCTPL has reversed the entire provision and recognized a corresponding credit within other expenses in the statement of unaudited consolidated financial results and has not created any provision for the quarter ended 30 June 2026 on the basis that it had submitted a request to MHI seeking an extension of time for compliance with the investment milestone and a waiver of the related liquidated damages."

Ola had earlier created the provision following a government notice dated March 3, 2025, concerning delays in meeting the required investment milestones. However, during the quarter ended June 30, 2026, OCTPL requested additional time to meet the milestones and sought a waiver of the related penalties. Since no approval had been received from MHI by June 30, the company reversed the entire provision and recorded the amount as a credit under other expenses.

The auditor, however, said it could not obtain sufficient evidence to confirm whether the reversal was appropriate. In the absence of approval from MHI, the auditor was also unable to determine whether an additional provision should have been recorded for the quarter.

Ola was selected in 2022 to develop 20 GWh of lithium-ion cell manufacturing capacity under the PLI scheme. It subsequently decided to initially limit capacity to 6 GWh and expand it later, which resulted in a breach of the scheme’s investment requirements.

Experts have raised concerns over the accounting treatment. InGovern Research Services founder Shriram Subramanian described the move as potentially aggressive accounting, particularly if the provision remains reversed in FY27 without ministry approval. However, KPB & Associates partner Paras Savla said the auditor’s observation alone does not establish that the accounting is incorrect.

Ola Electric has also faced other auditor concerns in the past. Since its August 2024 listing, its shares have fallen about 46%, while its market share declined from around 35% in FY24 to 8% by June 2026.

This highlights the crucial role of Chartered Accountants (CAs) in safeguarding financial transparency and protecting investor interests.