Zelio E-Mobility Limited faces a potential liability of approximately ₹6.72 crore after receiving a Demand cum Show Cause Notice from the Principal Commissioner of Customs, ICD PPG & Other ICDs, Delhi. The notice, issued on July 29, 2026, alleges that the company misclassified certain imported goods, specifically e-scooters imported in Completely Knocked Down (CKD) condition during FY22 and FY23. The authority questions the company’s availment of Integrated Goods and Services Tax (IGST) concessions based on this classification error. This development introduces immediate regulatory scrutiny and potential financial outflows for the electric vehicle manufacturer as it navigates compliance with customs regulations.

The disclosure was made to the Bombay Stock Exchange on August 03, 2026, pursuant to Regulation 30 read with Para A of Part A of Schedule III of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. Zelio E-Mobility stated that the notice was emailed on July 30, 2026, but was inadvertently routed to the company’s spam folder, delaying its review until August 03, 2026. The company subsequently issued a revised intimation to explicitly include the specific quantum of the proposed differential customs duty, which was omitted in the initial filing.

The notice, numbered 29/PC/2026-27 (File No. GEN/ADT/PCA/111/2026-ICD-BBG-CUS-COMMRTE-PPG-DELHI), invokes Section 28(4) read with Section 99A of the Customs Act, 1962. It proposes the recovery of a differential customs duty of approximately ₹6.72 crore (₹6,72,42,832), excluding applicable interest under Section 28AA and a penalty under Section 114A of the Customs Act, 1962. Additionally, the authority has called upon the company to explain why the imported goods should not be held liable for confiscation under Section 111(m) of the same act.

The company is required to file its reply within 30 days of receiving the notice. In its submission, Zelio E-Mobility noted that while the financial impact cannot be fully quantified until adjudication is complete, management does not expect any immediate impact on operations. The firm believes the imports were undertaken based on a bona fide understanding of applicable customs classification. It is seeking appropriate legal advice and is in the process of formulating its response to submit before the competent authority within the stipulated period.

Regulatory Context

The disclosure aligns with SEBI Master Circular No. SEBI/HO/CFD/PoD2/CIR/P/0155 dated November 11, 2024, which mandates timely reporting of such communications. The delay in disclosure was attributed to an internal IT routing error rather than intentional withholding. Managing Director Kunal Arya signed the intimation, affirming that the company is taking all necessary measures to protect its interests and will pursue the matter diligently in accordance with applicable legal provisions.

Zelio E-Mobility has inaugurated a new manufacturing plant in Coimbatore, Tamil Nadu, increasing its total installed production capacity to 2,40,000 units per annum. The new facility, located at Trichy Road, Nagiyyaan Thottam, Lakshmi Nagar Kannampalayam, adds 60,000 units of annual capacity, strengthening the company's presence in South India. The plant commenced operations on July 13, 2026, and will cater to markets including Tamil Nadu, Karnataka, Kerala, Telangana, Andhra Pradesh, and South Maharashtra.

The Coimbatore facility spans approximately 39,000 sq. ft. and is established with a capital investment of up to ₹1 crore, financed through internal accruals. During its initial phase, the plant is expected to manufacture and assemble approximately 24,000–30,000 electric two-wheelers annually. The company aims to scale production over the next 12–24 months to meet market demand and support dealer network expansion.

Prior to this expansion, Zelio E-Mobility's total installed manufacturing capacity stood at 1,80,000 units per annum with a utilization rate of approximately 40% as on March 31, 2026. The new addition represents a 33% expansion in the company's aggregate capacity. The facility currently employs 30 direct workers and is expected to contribute to the company's goal of surpassing 500 employees in the current financial year.

Capacity and Investment Details

The company provided the following details regarding the capacity addition and investment:

Strategic Rationale

The expansion aims to enhance production capacity, improve regional supply efficiency, optimize logistics, and achieve greater operating leverage. Kunal Arya, Managing Director of Zelio E-Mobility, stated that the launch marks a major milestone in the company's growth journey. He emphasized that South India represents a promising market and the facility will improve supply chain responsiveness and support accelerated EV adoption.

Zelio E-Mobility's manufacturing network includes plants in Ladwa and Patan in Haryana, and Cuttack in Odisha. The company reported a revenue of ₹313.68 crore in FY2025-26, an increase of 81.8% year-on-year, and has maintained profitability since inception. Following its BSE SME listing in October 2025, the company continues to expand its dealer network, which currently spans over 400 dealers across 25+ states.