Behind India's most-hyped EV startup's growth story is a quieter crisis: the small vendors who built its scooters are still waiting to be paid — and some have stopped waiting.
Picture this: you run a mid-sized factory in the Bengaluru industrial belt. You make traction motors — the component that literally makes an electric scooter move. You supply them to one of India's most-talked-about EV companies, fresh off a stock market listing. Invoices go out. Forty-five days pass. Then sixty. Then ninety. Then a legal notice arrives saying your parts had "quality issues." You've been patient long enough. You walk into the NCLT.
That is, roughly, what happened to Anevolve Mando eMobility, the e-mobility arm of the ₹20,000-crore Anand Group, one of India's most respected auto-component houses. The EV company is Ola Electric. And Anevolve isn't alone.
Sterling E-Mobility Solutions Ltd., the EV components arm of listed Sterling Tools Ltd., and Anevolve Mando eMobility Pvt. Ltd., a part of the Anand Group, have both filed insolvency petitions at the NCLT. They are seeking insolvency proceedings over alleged unpaid operational dues of more than ₹40 crore.
These aren't corner-shop vendors. Sterling E-Mobility manufactures components such as traction motors, motor control units and DC converters, while Anevolve Mando supplies traction motors, controllers, inverters and AC/DC converters — critical components used in electric vehicles. In other words, these are suppliers of the guts of the scooter, not the decorative trim.
Ola Electric Technologies allegedly owes ₹29.8 crore to Sterling E-Mobility Solutions and ₹10.8 crore to Anevolve Mando eMobility, according to filings with the Ministry of Corporate Affairs. Separately, an NCLT hearing note refers to an Anevolve petition over an alleged operational debt of ₹9.84 crore arising from the supply of motors. The difference in figures across reports reflects different stages of the legal proceedings — a detail worth tracking as hearings continue.
Both suppliers have filed petitions under Section 9 of the Insolvency and Bankruptcy Code — the provision used by operational creditors to seek initiation of a Corporate Insolvency Resolution Process (CIRP) in cases of alleged default. Separately, Ola Electric Technologies recently settled and closed an earlier NCLT matter with the Rosmerta Group after dues were paid and the petitions were withdrawn. That prior episode — involving a vehicle registration partner, not a component supplier — makes this pattern harder to dismiss as coincidence.
Here's what makes this more than a vendor dispute: MCA filings reveal a clear pattern of deterioration, quarter by quarter, since Ola Electric listed on the exchanges in August 2024.
For FY26, Ola Electric reported revenue from operations of ₹2,253 crore, down 50.1% from ₹4,514 crore in FY25. The annual net loss narrowed 19.5% to ₹1,833 crore from ₹2,276 crore a year earlier. The company delivered 20,256 units in Q4 FY26 and 173,794 units for the full year. Operating cash flow for the full year remained negative at ₹775 crore — a detail that matters, because it is the underlying cause of the payment pressure.
As volumes fell and cash stayed tight, payment discipline toward MSME suppliers — the small and medium manufacturers India's law specifically tries to protect — deteriorated sharply. The picture, drawn from MSME-1 filings (a mandatory half-yearly disclosure to the MCA whenever MSME dues remain outstanding beyond 45 days), is stark:
Total outstanding dues to MSMEs actually fell — from ₹238 crore to ₹102 crore — because Ola was producing and procuring less. But the share of that smaller pie sitting beyond 45 days exploded. As of March 31, 2026, Ola Electric's current trade payables stood at about ₹679 crore, comprising ₹116 crore owed to micro and small enterprises and ₹563 crore owed to other creditors.
The timing trend shifted too. Between April and September 2024, 92% of MSME payments were cleared within the statutory window. By October 2025–March 2026, only 43% were.
To understand why vendors are walking into the NCLT rather than quietly absorbing the delay, you need to understand what "45 days" actually means in Indian law.
The Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 requires buyers to pay registered MSME suppliers within 45 days if there's a written agreement, or 15 days if there isn't one. But enforcement was historically weak. That changed on 1 April 2024.
The MSME 45-day payment rule mandates that buyers must pay micro and small enterprises within 45 days if a written agreement exists, and within 15 days if there is no written agreement. The government introduced this under Section 43B(h) of the Income Tax Act to solve the problem of delayed payments faced by micro and small businesses.
Section 43B(h) disallows the expense deduction for payments to micro and small enterprise suppliers if payment isn't made within the time allowed under Section 15 of the MSMED Act. In plain terms: if you owe ₹10 lakh to an MSME supplier and haven't paid within 45 days by March 31, you cannot claim that ₹10 lakh as a deductible business expense in that financial year. You only get the deduction in the year you actually pay.
There's a second penalty on top of that. Businesses that fail to pay within the 45-day limit incur compound interest at three times the bank rate notified by the Reserve Bank of India. With the RBI bank rate currently at 6.5%, that translates to an effective interest rate of 19.5% per annum — compounded monthly, far higher than most commercial borrowings. The interest paid is not deductible as a business expense for income tax, so the buyer pays the penalty and cannot reduce taxable income with it.
And there's a third consequence: visibility. Form MSME-1 is a mandatory half-yearly return filed with the Registrar of Companies that reports any payments to MSME suppliers remaining overdue for more than 45 days. These returns are public — which is precisely how Ola's deteriorating payment record became visible in the first place.
The 45-day rule has quietly converted MSME payments from a courtesy into a compliance obligation — with tax, interest, and reputational consequences for defaulters.
Ola Electric hasn't stayed silent. In a filing with the stock exchanges, the company said it had raised warranty and performance-related concerns regarding certain parts supplied by Anevolve Mando E-Mobility Pvt. Ltd. and Sterling E-Mobility Solutions Pvt. Ltd., which remained unresolved.
The company stated: "Subsequent to the initiation of the aforesaid arbitration proceedings, Anevolve Mando E-Mobility Pvt. Ltd and Sterling E-Mobility Solutions Pvt. Ltd filed petitions under Section 9 of the Insolvency and Bankruptcy Code, 2016 in relation to the same underlying transactions." Ola Electric is of the view that the disputes are "subject to genuine pre-existing disputes, which are pending adjudication through arbitration," and is "contesting the aforesaid petitions and taking all appropriate legal steps."
The logic is legally strategic. Under the IBC framework, a credible pre-existing dispute — say, a live quality dispute — can be a complete defence against admission of an insolvency petition by an operational creditor. If Ola can establish that a genuine dispute existed before the demand notice, the NCLT may decline to admit the petition entirely. It's a legitimate argument and one that has worked for companies before.
Earlier this year, vehicle registration service provider Rosmerta Digital Services had filed a similar insolvency petition over unpaid dues. That dispute was later settled outside court after the company agreed to clear the outstanding payments. The quality-dispute defence may yet produce a similar outcome here.
Whether it holds depends on NCLT proceedings still underway. But it is worth noting: the scale of overdue dues — roughly 80% of all outstanding MSME payables — suggests the payment strain is systemic, not limited to two allegedly defective vendors.
The sharpest way to understand Ola's problem is to hold it against its nearest peer.
Ather is not a profitable company either. But it managed to keep its MSME payment discipline essentially intact through the same period in which Ola's collapsed. The gap isn't a minor variance. It's the difference between a company that has its cash-cycle broadly under control and one that is using its supply chain as a de facto credit line.
(Note: The Ather comparison figures derive from a Mint analysis of MSME-1 filings and could not be independently corroborated from open sources. They are directionally consistent with what multiple subsequent reports cite.)
Using supplier credit is entirely normal. Every auto company in the world does it. The question is: when does "supplier credit" tip into "suppliers financing your losses"?
An EV manufacturer has a brutal cash-conversion cycle. It pays for components — cells, motors, controllers, chassis — before it assembles a scooter, sells it to a dealer, and collects cash. When sales volumes drop sharply, the company collects less cash from customers while accrued obligations to suppliers keep building. Ola's revenue fell 50.1% to ₹2,253 crore in FY26, and deliveries totalled 173,794 units for the year, with only 20,256 units in Q4.
One release valve is simply to take longer to pay. From the company's perspective, this preserves internal cash. From the supplier's perspective, they are involuntarily lending money to a loss-making listed company at effectively 0% interest — until the MSMED Act kicks in and makes it 19.5%.
Before the 45-day rule, large enterprises often delayed vendor payments indefinitely, and small businesses had little recourse beyond waiting and borrowing more to fund their own operations. For a motor manufacturer, a ₹10 crore receivable stuck with a large OEM can mean the difference between making payroll and not. They don't have access to QIP markets or institutional investors.
Speaking of which — Ola did raise fresh capital. Ola Electric Mobility raised ₹780 crore through a qualified institutional placement (QIP) that was oversubscribed 56%, driven by strong participation from domestic and global institutional investors. The issue attracted demand from long-only investors including Goldman Sachs and BNP Climate Fund, alongside Indian mutual funds such as Motilal Oswal, Mirae Asset, and Kotak Mahindra.
Under the issue, the company allotted 21.76 crore equity shares at an issue price of ₹35.86 per share — a discount of 4.98% to the floor price of ₹37.74. For context, Ola had listed at ₹91.18 against its IPO price of ₹76; by the time of the QIP, the stock had corrected to the mid-thirties.
₹780 crore is meaningful. But set against a full-year net loss of ₹1,833 crore and a still-negative annual operating cash flow, raising and spending isn't enough. The cash-cycle problem resolves only when volume and margins reach the point where the business generates its own cash. Which brings us to the one genuinely encouraging data point.
Ola Electric registered 43,719 vehicles in Q1 FY27, nearly doubling from 22,252 in Q4 FY26. The quarter concluded with 16,144 registrations in June 2026, the company's strongest monthly performance in recent quarters. Volume recovery, if it holds, is the real medicine.
A fair reading requires acknowledging what is genuinely improving.
Average service turnaround time reduced by 88% — from around nine days in October 2025 to nearly one day by March 2026. Service backlog reduced from 14 days to 6 days. Same-day closures improved to nearly 87%. Service was the biggest single drag on brand trust through FY26; its stabilisation is real.
Consolidated gross margin stood at 38.5% in Q4 FY26 and 30.6% for the full year — the Q4 figure is industry-leading and validates the vertically integrated manufacturing thesis. Ola also delivered its first operating cash-flow-positive quarter in Q4 FY26, with consolidated CFO of ₹91 crore, supported by PLI inflows, stronger gross margins, lower operating expenditure, and tighter working-capital discipline.
Ola Electric's subsidiary also received Bureau of Indian Standards (BIS) certification for its indigenously developed LFP 46100 cylindrical cell, marking a milestone in its battery manufacturing ambitions.
The bulls' argument: FY26 was a deliberate reset year, focused on fixing quality, service, and cost structure before re-accelerating. If Q1 FY27 volumes hold and the QIP cash reduces the debt burden, payment discipline may restore itself naturally.
The bears' counter: repeated vendor-led insolvency petitions create an uncomfortable pattern for a company trying to convince investors, customers, and suppliers that its operating reset is working. The stock also remains under the long-term Additional Surveillance Measure (ASM) framework on both BSE and NSE — a monitoring mechanism, not a death sentence, but not a great advertisement either.
Here is the deeper irony this story surfaces. India's government has spent considerable political energy championing two things simultaneously: the EV transition and MSME welfare. It gave EV makers production-linked incentive (PLI) subsidies to scale up manufacturing. It gave MSME suppliers the 45-day rule and Section 43B(h) to stop being squeezed by larger buyers.
What the Ola Electric situation reveals is that these two goals can directly collide. Scaling hardware manufacturing in India is capital-intensive, cash-hungry, and brutally unforgiving of volume downturns. When an EV startup hits a rough patch, the first thing that gives is payment discipline to the very MSME component manufacturers who are supposed to be benefiting from the EV boom.
That is why these supplier cases matter beyond the legal paperwork. While it remains unclear whether the current supplier disputes could disrupt Ola Electric's production, the previous disagreement with its registration partner had temporarily affected vehicle sales. Component suppliers are a different order of dependence.
The 45-day rule was designed precisely for this scenario: to ensure the working-capital pain of a stumbling large buyer doesn't get silently exported to the small manufacturers in its supply chain. The fact that vendors from the Anand Group and Sterling Tools — not fly-by-night operators, but listed-group companies with institutional reputations to protect — have filed NCLT petitions is proof the law has teeth.
Whether Ola clears its dues commercially or fights each petition on quality-dispute grounds will tell us something important about how India's EV champions intend to treat the small companies that build them from the ground up.
A scooter is only as good as its motor. And the people who make the motor deserve to be paid on time.