Ola Electric Mobility Ltd.'s auditor BSR & Co., the Indian affiliate of KPMG, has questioned the company's decision to reverse a Rs 57-crore provision made for potential penalties under the government's production-linked incentive (PLI) scheme, saying there was no formal government approval to support the accounting treatment, according to a Mint report.
The auditor reportedly issued a qualified conclusion on Ola Electric's June-quarter financial statements, marking the first such qualification since the electric two-wheeler maker was listed in August 2024.
The issue relates to Ola Cell Technologies Pvt. Ltd. (OCTPL), a subsidiary of Ola Electric, which had created the provision after missing an investment milestone under the PLI scheme for advanced chemistry cells.
Ola Electric was selected under the scheme in 2022 to establish 20 GWh of lithium-ion cell manufacturing capacity. It later restricted its initial capacity to 6 GWh, with plans to expand it after making additional investments in the following fiscal year.
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Under the scheme, the company was required to invest Rs 225 crore per GWh of awarded capacity within two years. Following a government notice dated March 3, 2025, OCTPL provided Rs 57 crore towards potential liquidated damages.
Why Did The Auditor Question The Reversal?
Ola Electric reversed the entire provision during the June quarter after seeking an extension of the investment deadline and a waiver of the penalty, according to the report.
However, BSR & Co. said that as of June 30, 2026, it had not received sufficient evidence of any formal decision by the Ministry of Heavy Industries granting the waiver.
As a result, the auditor could not determine whether reversing the provision, without recognising a fresh provision, was appropriate.
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Ola Electric said it was confident of receiving the waiver based on its discussions with the ministry.
The Rs 57-crore reversal also reduced the company's reported loss for the quarter.
Ola Electric posted a consolidated net loss of Rs 336 crore for April-June, compared with Rs 428 crore a year earlier. Without the reversal, the loss would have been about Rs 393 crore.
Revenue from operations declined 45% year-on-year to Rs 455 crore.
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