New Delhi: Shares of Ola Electric Mobility Ltd ended over 7 per cent lower on Monday after the firm said its vehicle registration service provider Rosmerta Digital Services Ltd has sought the initiation of insolvency proceedings against its wholly-owned arm Ola Electric Technologies Pvt Ltd.

The stock slumped 7.18 per cent to settle at Rs 46.91 on the BSE. During the day, it hit the record low of Rs 46.40, reflecting a decline of 8.19 per cent. At the NSE, shares of the firm tumbled 7.22 per cent to Rs 46.86. Intra-day, the stock dropped 8.13 per cent to Rs 46.40 — the record low level.

The company’s market valuation eroded by Rs 1,601.13 crore to Rs 20,691.20 crore. In a regulatory filing, the company on Saturday said, “A petition has been filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC) by M/s. Rosmerta Digital Services Ltd, an operational creditor of Ola Electric Technologies Pvt Ltd.” 

The petition has been submitted before the National Company Law Tribunal’s Bengaluru Bench, alleging default in payment towards the services rendered by the operational creditor and seeking initiation of the corporate insolvency resolution process (CIRP) against Ola Electric Technologies Pvt Ltd, it added.

The company has sought appropriate legal advice and it strongly disputes the claims made, Ola Electric Mobility said, adding it would “take all necessary and appropriate steps to protect its interests and object to the allegations in the aforesaid matter”.

The insolvency proceedings come at a time when Ola Electric Mobility is cutting around 1,000 jobs across different functions as part of a restructuring exercise to reduce losses.