Greaves Cotton share price falls 10% after government directs to repay subsidy for violation of guidelines
Greaves Cotton, on May 26, said that the Ministry of Heavy Industries has directed its subsidiary Greaves Electric Mobility Private Ltd (GEMPL) to deposit the subsidy of around ₹124 crore, along with interest, for violating the Phased Manufacturing Programme (PMP) guidelines.
PremiumGreaves Cotton share price plunged nearly 10% Friday after the government asked the company’s subsidiary to return the subsidy amount along with interest for violation of guidelines. The stock price fell as much as 9.9.% to ₹133.70 apiece on the BSE.
Greaves Cotton, on May 26, said that the Ministry of Heavy Industries has directed its subsidiary Greaves Electric Mobility Private Ltd (GEMPL) to deposit the subsidy of around ₹124 crore, along with interest, for violating the Phased Manufacturing Programme (PMP) guidelines.
“...it is hereby informed that Ministry of Heavy Industries vide its letter dated 25th May 2023, has alleged that Greaves Electric Mobility Private Limited (GEMPL), material subsidiary of the Company, purportedly failed to adhere to Phased Manufacturing Programme Guidelines and allegedly has proposed to deregister it from FAME India Scheme Phase II (Scheme).
MHI has further purportedly directed GEMPL to deposit all the incentive claimed (approx. ₹124 crore along with interest) under the said scheme to MHI subject to submission of necessary representation," Greaves Cotton said in a regulatory filing on Friday.
The Board of Directors of GEMPL will be reviewing and analysing the facts regarding the purported notice and the alleged violations for taking appropriate course of action including engaging with the government to better understand the alleged violations and for a resolution, in accordance with law, the company added.
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GEMPL operates under the Ampere brand and offers electric two-wheeler models Primus, Magnus EX, and Reo Plus under the Ampere brand.
The Faster Adoption and Manufacturing of Electric Vehicles (FAME) India scheme is aimed to enable wider adoption of electric and hybrid vehicles by incentivizing their buyers. The scheme commenced on April 1, 2019, for a period of three years, which was further extended for two years up to March 31, 2024.
Also Read: Two-wheeler EVs to get expensive from June 1 as government cuts FAME II subsidy
The government reduced the subsidy provided under the FAME-II scheme applicable on electric two-wheelers registered on or after June 1, 2023, according to a notification by the ministry of heavy industries.
Meanwhile, earlier this month, Greaves Cotton reported strong growth in consolidated net profit to ₹26.65 crore in the quarter ended March 2023, witnessing double-digit growth of 59.5% from ₹16.71 crore in the corresponding quarter of last year. The sequential growth was at a whopping triple-digit 314.5%.
The company’s consolidated revenue in Q4FY23 rose 33% YoY to ₹827 crore. On a quarter-on-quarter basis the revenue was up by 61.13% from ₹531.33 crore in Q3FY23.
At 11:25 am, the shares of Greaves Cotton were trading 9.30% lower at ₹134.65 apiece on the BSE.
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