Shares of Greaves Cotton Ltd declined nearly 10 percent on May 29 after the government asked the company to return the subsidy amount along with interest for violation of rules.

The stock fell as much as 9.6 percent to Rs  134.20 on the BSE. At 9.30am, it was trading at Rs 138.55, down 7 percent from its previous close.

On May 26, Greaves Cotton Ltd announced that the Indian government has requested a subsidy of around Rs 124 crore, along with interest, from Greaves Electric Mobility Private Ltd (GEMPL) for violating the Phased Manufacturing Programme (PMP) guidelines.

Greaves Electric Mobility is a subsidiary of Greaves Cotton Ltd and operates under the Ampere brand. It offers a range of electric two-wheeler models, including Primus, Magnus EX, and Reo Plus. These models are part of the Ampere brand's product lineup in the electric mobility segment.

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

The company said its board 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 gain a better understanding of the alleged violations and work towards a resolution.