EPC player Gensol Engineering, facing a financial crisis due to delay in loan servicing and the subsequent credit rating downgrade, has denied any involvement in falsification of claims and plans to set up a committee to comprehensively review the matter.
Shares of Gensol Engineering were lower by 10% on March 5, and have fallen by 34% in last five trading sessions after multiple downgrades over ongoing delays in servicing term loan obligations.
In a statement, Gensol Engineering has said that the rating downgrade by CARE and ICRA have happened due to 'short-term liquidity mismatch', which is improving by way of customer payments.
"...we deny any involvement in falsification claims and would be setting up a committee to comprehensively review the matter," Gensol's statement said.
Gensol said it has reported strong growth in key financial parameters, with an orderbook of over Rs 7,000 crore, with 'significant revenue visibility'.
The company has initiated a series of asset divestments to significantly reduce our debt, as part of a strategic deleveraging. Gensol will be selling close to 3,000 electric vehicles for a sum of Rs 315 crore, as well as sell a wholly-owned subsidiary for Rs 350 crore. These measures are expected to significantly reduce its debt by Rs 665 crore, and improve the debt-equity ratio to 0.8, Gensol said.
"...all proceeds from the above initiatives will be directly utilized toward repaying our existing debt and working capital obligations," Gensol added.
The management said it is aiming to achieve a zero net-debt status through these interventions and initiatives.
Gensol has also shared its current debt profile and actions taken, which are as follows:
1. In GEL standalone, the current fund-based capital limit for Solar EPC stands at Rs 249 crore.
2. In GEL standalone, the term loan for EV vehicles stands at Rs 645 crore.
3. In the EV leasing subsidiary company, the current term loan stands at Rs 252 crore.
4. The total current debt stands at Rs 1,146 crore. against the reserves of Rs 589 crore.
5. In the current financial year, we have reduced our debt obligation by around Rs 230 crore.
"We are confident in our ability to navigate this period and emerge stronger. We value the trust of our stakeholders and will provide regular updates as we progress towards our financial goals," the statement said.
On March 4, ICRA had reported 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 the liquidity position.
Gensol's linkage with the promoter group company BluSmart - a loss-making entity - also led to the rating downgrade, ICRA said, adding that this can have an adverse impact on the financial flexibility and capital raising ability of GEL.
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