Shares of Azure Power Global (AZRE -1.16%) tumbled nearly 40% by 12:15 p.m. ET on Monday. The India-based renewable energy company disclosed some employee misconduct and the resignation of its recently named CEO.
Azure Power provided investors with a series of updates, including whistleblower allegations and the resignation of its CEO. The renewable power producer revealed that it received a whistleblower complaint in May "alleging potential procedural irregularities and misconduct by certain employees at a plant belonging to one of its subsidiaries."
The company reviewed the allegations and "discovered deviations from safety and quality norms." That led it to take steps to rectify the situation immediately. It also identified evidence of project data manipulation and information that it's working to address.
On top of that, Azure announced the resignation of CEO Harsh Shah, effective immediately, due to "unforeseen circumstances and matters beyond my control." Shah only recently assumed the CEO role in July, joining the company from IndiGrid, where he was also the CEO.
The company named Rupesh Agarwal as interim CEO. Agarwal joined Azure earlier this month as its chief strategy and commercial officer. The company plans to look for a permanent CEO.
Azure Power also noted that it's working on filing its annual report. However, it cannot give a timeline for when that will happen. It did provide some key operational highlights, including a 30% increase in electricity generation in its 2021-22 fiscal year and that the company completed construction on the largest solar project in India.
Azure Power provided investors with a double dose of bad news: Not only did it find some irregularities, but it's also losing its recently named CEO, which the company thought would lead it into the future. While there's a lot of promise in renewable energy, especially in India, given the country's population, these dual uncertainties of reporting issues and a CEO search could weigh on this stock for quite some time.