Shares of Greaves Cotton Ltd fell nearly 10% on May 29 after the government ordered the company to return the subsidy amount plus interest for breaching the rules.

The stock fell 9.6% to Rs 134.20 on the BSE. It was trading at Rs 138.55 at 9:30 am, down 7% from its last close.

On May 26, Greaves Cotton Ltd announced that the Indian government has asked Greaves Electric Mobility Private Ltd (GEMPL) to receive a subsidy of approximately Rs 124 crore plus interest for violating Phased Manufacturing Programme (PMP) guidelines.

Greaves Electric Mobility is a subsidiary of Greaves Cotton Ltd operating under the Ampere brand. It offers a range of electric two-wheeler models including the Primus, Magnus EX and Reo Plus. These models are part of the Ampere brand’s range in the field of electric vehicles.

In a letter dated May 25, the Ministry of Heavy Industries informed Greaves Cotton that it may cancel the company’s registration with FAME India Scheme Phase II due to the company’s failure to comply with the PMP guidelines. The ministry also directed Greaves Electric Mobility Private Ltd (GEMPL) to deposit all incentives claimed under the scheme, amounting to Rs 124 crore, together with interest. This deposit is subject to GEMPL submitting the required representations.

The company said its board of directors will carefully review and analyse the details of the notice and the alleged violations. They intend to take the necessary steps to address the situation, which may involve engaging with the government to better understand the alleged violations and work towards a resolution.