Gensol Engineering, part of the Gensol group, shed more market cap today after sliding 10 per cent. This came on the heels of credit ratings agency ICRA pulling down the company’s credit rating and CARE Ratings downgrading Gensol Engineering’s long-term and short-term lending facilities.
So far, in the last three trading sessions, Gensol stock slumped 40 per cent. In light of the recent stock movement, the company issued a clarification: “Gensol Engineering Limited acknowledges the recent credit rating downgrades by CARE and ICRA. The rating downgrade happened due to short-term liquidity mismatch which is improving by way of customer payments.”
“ICRA has now learnt that certain documents shared by Gensol Engineering with ICRA, on its debt servicing track record, were apparently falsified, which raises concerns on its corporate governance practices, including its liquidity position,” the ratings firm said in the downgrade announcement.
However, Gensol outright dismissed the reason for the downgrade, stating, “We deny any involvement in falsification claims and would be setting up a committee to comprehensively review the matter.”
To cut its debt, Gensol Engineering announced a slew of asset divestments, including the sale of 2,997 electric vehicles worth ₹315 crore. Other divestment measures include the sale of a wholly owned Gensol unit for ₹350 crore. “As a result of these two divestments, our debt will significantly reduce by ₹665 crore resulting in a debt-equity ratio of 0.8.”
Gensol also assured shareholders that all proceeds from the sale or divestment of assets would go to repaying existing debt and working capital obligations.
“Through these periodic interventions and upcoming planned initiatives, we are resolute in our goal of achieving a zero net-debt status,” stated the company.
However, the current total debt of Gensol Engineering stands at a staggering ₹1,146 crore. When compared to its reserves of ₹589 crore, the current debt-equity ratio stands at 1.95, despite cutting its obligations by ₹230 crore in the current fiscal year so far.
The total debt includes a fund-based capital limit for Solar EPC at ₹249 crore, a term loan for EV vehicles at ₹645 crore, and a ₹252 crore term loan in its EV leasing subsidiary.
