Shares of Ahmedabad-based solar plant construction company Gensol Engineering fell another 5% after a brief rise at the opening bell today. The Anmol Singh Jaggi-founded company's shares have declined nearly 40% in the last five days after ratings agency ICRA claimed it falsified its debt repayment records.
The agency also raised "concerns on its corporate governance practices, including its liquidity position" in a note on March 4, when it downgraded Gensol Engineering's credit rating. A day earlier, CARE Ratings had also downgraded its Rs 716 crore bank loan to default, citing delays in "servicing of term loan obligations."
The firm acknowledged the reports and attributed the repayment delays to a short-term liquidity mismatch, which it said was improving through customer payments.
However, it denied any involvement in “falsification" and has set up a committee to comprehensively review the matter.
Adding to its woes, Gensol Engineering's CFO Ankit Jain resigned on March 6 to pursue other opportunities, prompting the company to bring back Jabirmahendi Aga as its new Chief Financial Officer.
"We are going through a tough time, and Jabir is the man best suited to lead us through it," said Gensol Engineering Chairman & Managing Director Anmol Singh Jaggi.
High Debt Woes
Founded in 2012, Gensol Engineering specialises in solar power engineering, procurement, and construction (EPC) services. The company was listed on the stock market in 2019 — the same year its promoter, Jaggi, launched the electric cab-hailing business BluSmart Mobility.
Since then, Gensol Engineering has also diversified into electric vehicle (EV) leasing and manufacturing, constructing an EV plant in Chakan, Pune.
ICRA notes that Gensol's "order book is healthy," with an unexecuted order backlog of more than Rs 7,000 crore. However, concerns remain over liquidity management and debt raised by promoter Anmol Singh Jaggi, who pledged as much as 85.5% of his shares.
According to a Mint report, when the company announced plans to set up an EV plant, its share price surged from just Rs 3 apiece to Rs 1,200 by March 2024. During this rally, Jaggi borrowed large sums using his shares as collateral.
However, as the company's earnings disappointed in the following quarter, investors began raising questions.
According to Gensol's recent filings, its total current debt stands at Rs 1,146 crore, against reserves of Rs 589 crore, resulting in a debt-to-equity ratio of 1.95. The current fund-based capital limit for its solar EPC division stands at Rs 249 crore, while the term loan for EV vehicles is Rs 645 crore, and the term loan for the EV leasing unit is Rs 252 crore.
To reduce this debt, the company plans to sell a wholly owned US subsidiary for Rs 350 crore and is also in talks to sell 2,997 electric vehicles worth Rs 315 crore to Chennai's Refex Green Mobility.
However, before these transactions could take place, Mint reported that Gensol has delayed repayments to its largest lender, the Indian Renewable Energy Development Agency (IREDA), by up to 60 days—contradicting the company's claims of only a minor delay.
IREDA, however, clarified that the loans have not turned non-performing and there is no proposal for restructuring.
As of a November ICRA report, Gensol's key creditors included, Power Finance Corp (Rs 334.8 crore), HDFC Bank (Rs 26.4 crore) Tata Motors Finance (Rs 18.3 crore) and Axis Bank (Rs 15 crore).
