Olectra Shares Tanks After Maharashtra Minister Pushes to Cancel 5,150 Electric Bus Deal

Key Highlights:

• Shares of Olectra Greentech Ltd fell nearly 14%.
• Maharashtra Transport Minister Pratap Sarnaik posted that the supplier failed to deliver even one bus by the revised May 22 deadline.
• Olectra clarified that the project is being executed by a Special Purpose Vehicle (SPV), where it holds only a 1% stake.
• If the 5,150-bus order is cancelled, Olectra’s pending orders will drop from 10,022 to about 4,872 buses.

Shares of Olectra Greentech Ltd dropped by up to 14% on Tuesday following worries about a major contract being cancelled. The company had a deal to supply 5,150 electric buses to the Maharashtra State Road Transport Corporation (MSRTC).

The concern started after Maharashtra’s Transport Minister, Pratap Sarnaik, posted on the social media platform X. He said that the company responsible had not been active in supplying the buses. He also mentioned that steps should be taken to cancel the agreement between MSRTC and the company. Although Sarnaik did not directly name Olectra Greentech, investors reacted strongly, fearing that the company might be affected by this move.

Olectra Greentech Under Pressure as Electric Bus Deal Faces Uncertainty

In June 2023, a joint venture between Olectra Greentech and EVEY Trans secured a contract from the Maharashtra State Road Transport Corporation (MSRTC). The deal involved supplying, operating, and maintaining 5,150 electric buses, along with building the required infrastructure. The contract was valued at around ₹10,000 crore for 12 years.

However, Maharashtra Transport Minister Pratap Sarnaik recently posted on the social media platform X, saying the supplier failed to deliver even one bus by the revised deadline of May 22, despite being given extra time to supply 1,000 buses.

He mentioned that this raised serious doubts about the company’s ability to fulfil the contract, and recommended that the tender agreement should be cancelled. Though he did not name Olectra Greentech directly, the market reacted sharply.

Shares of Olectra Greentech Ltd dropped sharply on Tuesday, declining nearly 14% in early trade. The stock, which closed at ₹1,345.40 on Monday, opened lower at ₹1,160.10 amid concerns over a possible cancellation of a major electric bus order.

In response, Olectra Greentech issued a clarification on Tuesday afternoon. The company stated that the bus order is being executed by a Special Purpose Vehicle (SPV) named EVEY Trans (MSR) Pvt Ltd and that no formal communication about cancellation has been received.

Olectra Greentech holds only 1% share in the special company (SPV) formed for the bus project, while the remaining 99% is owned by EVEY Trans Pvt Ltd. As per the deal, EVEY was supposed to buy the electric buses from Olectra. Olectra’s role is to maintain these buses for 12 years under a gross cost contract (GCC), where it gets paid based on fixed charges for running and maintaining the buses.

Olectra Greentech said in a stock exchange filing that all talks related to the electric bus project will be handled between the special company (SPV) and MSRTC. The company added that, according to EVEY, they have not received any official cancellation notice and the work on the contract is still going on. If the order for 5,150 buses is cancelled, it would reduce Olectra’s total pending orders by half. As of March 31, the company had pending orders for 10,022 electric buses. 

Also Read: Olectra Greentech Secures India’s Largest Outright Order for Electric Buses from HRTC

CMV360 Says

The sharp fall in Olectra’s shares shows how sensitive the market is to government contracts and timely execution. While the company has clarified its limited role in the deal, the uncertainty around the project raises serious concerns about delivery capabilities and communication gaps in such large-scale public contracts.