Olectra Stock Tanks After Maharashtra Minister Calls For Cancellation Of 5,150-E-bus Order

Shares of Olectra Greentech Ltd plunged as much as 14% on Tuesday amid concerns regarding the cancellation of a contract with Maharashtra State Road Transport Corporation (MSRTC) to supply 5,150 electric buses. 

The concerns emerged after the Maharashtra Transport Minister Pratap Sarnaik wrote on the social media platform X regarding the tender agreement: “The company concerned has been inactive in supplying 5150 leased electric buses and the meeting directed that action should be taken to cancel the tender agreement signed by ST Corporation with this company.”  Sarnaik, however, did not name Olectra Greentech or any other company associated with this contract. 

In June 2023, a consortium of Olectra Greentech and EVEY Trans received an order from the MSRTC to supply, operate, and maintain 5,150 electric buses, along with their associated electrical and civil infrastructure. The contract was worth approximately Rs 10,000 crore for 12 years.

He noted that the concerned supplier had been given a revised schedule to supply 1,000 buses by May 22 and not a single bus has been delivered yet. 

“Therefore, there is doubt about the supply of buses by this organization in the future. Therefore, it was said that the tender agreement with the company should be canceled,” he added in his post.

Following this, Olectra Greentech’s shares, which closed at Rs 1,345.40 on Monday, fell almost 14% to Rs 1,160.10 when the stock opened for trading on Tuesday.

However, the company issued a clarification on Tuesday afternoon saying the order for 5,150 electric buses from MSRTC is being executed by a Special Purpose Vehicle named EVEY Trans (MSR) Pvt Ltd, which has not received any communication on order cancellation. 

Olectra has a 1% stake in the SPV while the remaining stake is with EVEY Trans Pvt Ltd. EVEY was supposed to procure the buses from Olectra, which will also be responsible for their maintenance during the contract period of 12 years on a gross cost contract (GCC) basis.

“In view of the above, all communications about this project shall be made between the SPV and MSRTC itself. At present, the Contract execution is under process and as per the clarification provided by EVEY, they haven’t received any such order as of now,” Olectra Greentech said in a stock exchange filing.

The cancellation of an order for 5,150 buses will effectively halve the company's current order book. As of March 31, Olectra Greentech’s pending order book reportedly stood at 10,022 electric buses.

 Olectra Greentech’s share closed on Tuesday at Rs 1,265, down 6%.