Greaves Cotton of India reports a Q2 loss due to an odd expense

 Greaves Cotton of India reports a Q2 loss due to an odd expense

For the quarter that ended on September 30, the firm reported a combined loss of 1.91 billion rupees ($22.9 million), down from a profit of 288.8 million rupees the previous year.

Greaves Cotton of India announced a loss for the second quarter on November 7. The company attributed the loss to increased expenditures and a one-time penalty related to a government incentive for the sale of electric scooters.

For the quarter that ended on September 30, the firm reported a combined loss of 1.91 billion rupees ($22.9 million), down from a profit of 288.8 million rupees the previous year.

The Indian government had sent Greaves a notice in May, alleging that its electric vehicle business had not followed the rules of an e-scooter incentive program, and directing it to refund the subsidies that had been obtained.

Separately, the government reduced the monetary incentives for e-scooters in May without providing a reason, stating that it would only cover up to 15% of the cost before taxes as opposed to 40% before.

Greaves, a company that also produces engines and powertrains, disclosed a 4.77 billion rupee provision relating to subsidies. 3.81 billion rupees was its total one-time cost, mostly from the profit from the sale of land.

Due to a decline in sales of its electric scooters bearing the "Ampere" brand after the reduction in subsidies, the business had already declared a loss of 50.8 million rupees for the preceding quarter.

Expenses increased by 4.5% throughout the quarter, exceeding revenue growth of 4%. Its largest category, engines, had a 20% increase in sales, while its electric mobility area saw a 37% decline.

Since its unit got the government notification suggesting that it be de-registered from the incentive program, shares have ended flat and are down 12.3%.