Shares of Ola Electric Mobility plunged 6 per cent on Tuesday after the company received a show cause notice from the Central Consumer Protection Authority for alleged violation of misleading advertisement and unfair trade practices.
The stock of the company fell 6.17 per cent to trade at 85.21 apiece, extending the losses in the fourth straight session on the BSE.
On the NSE, it slumped 5.30 per cent to ₹86 per piece.
The 30-share BSE Sensex jumped 407.31 points or 0.50 per cent to 81,457.31 while NSE Nifty rose 145.35 points or 0.59 per cent to 24,941.10.
In a regulatory filing on Monday, the Ola Electric Mobility said it has received a show cause notice from the Central Consumer Protection Authority (CCPA) for alleged violation of consumer rights, misleading advertisement and unfair trade practices.
Further, the CCPA has provided a timeline of 15 days to the company to respond to the show cause notice.
However, in a clarification, the company said, the show cause notice has no impact on financial, operational or other activities of the company.
Furthermore, the show cause notice which is issued by the authority does not impose any penalties or financial fines.
On Monday, Ola Electric Mobility’s shares declined up to 10 per cent before settling lower by 8 per cent amid reports of service quality issues of its electric scooters and its CEO’s spat on social media.
The slide in the shares came after a war of words broke out between Ola founder Bhavish Agarwal and stand-up comedian Kunal Kamra on Sunday on social media platform X over the after-sales and service quality.
The controversy started when Kunal Kamra responded to a post on X by Agarwal, who posted a photo of Ola’s gigafactory, by putting a picture of several Ola Electric scooters parked together seemingly waiting for servicing.
In response to Kamra’s tweet, Bhavish Aggarwal called him a failed stand-up comic and his tweet a “paid one” asserting that Ola Electric is rapidly expanding its service network and will clear all the backlogs “soon.”
Further, many Ola Electric consumers jumped into the spat and complained about the service quality of the company, asking Agarwal to address their issues.
In August this year, Ola Electric Mobility was listed at an issue price of ₹76. It quickly doubled from its issue price to make a post-listing high of ₹157.4. Since touching the all-time high, the stock is down 46 per cent from those levels.
Ola Electric has been losing market share to legacy auto players like Bajaj Auto and TVS Motor as they ramp up their push within the EV space.