CARE downgrades Gensol to default category

By Nitin Jain
March 4, 2025
One Comment

CARE has got feedback from Gensol’s lenders that there have been delays in the servicing of term loan obligation and hence the downgrade from BB+ to D.

Company had an outstanding debt of Rs 1,150 cr as at December 31, 2024.
- It had negative operating cash flows during FY 24. During the current year, the situation continues to remain muted.
Major lenders to the Company include Indian Renewable Energy Development Agency (IREDA), Power Finance Corporation (PFC), Bandhan Bank, ICICI Bank, and HDFC Bank.

Company is trying to reduce debt (through asset sale) and claims that it’s on the right track to do so gradually. Difficult to rely on these predictions.

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Gensol Engineering

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Nitin Jain

20 days ago

Management has provided following key comments on the issue.

There have been some delays on debt due to operational reasons. Management is working diligently to resolve those at the earliest
Though there is a significant pledge of promoters’ shareholding, all the concerned lenders are supportive and unlikely that those shares will be dumped in the market
In the current financial year, Company has reduced debt by Rs 230 Cr.The total current debt stands at INR 1146 Cr
Company has initiated asset divestments to reduce debt:
The sale of 2,997 electric vehicles worth INR 315 Cr. Will happen quickly.
The sale of a wholly owned Gensol subsidiary company for INR 350 Cr. 50% is expected to come by April and balance 50% in another 4-5 months.
As a result of these two divestments, company expects its debt to reduce by INR 665 Cr.
Company expects that it’s rating will get upgraded out of D category in the next 90 days.
Business wise Company claims to have a order book of > Rs 7,000 cr to be executed over the next 18 months. Company expects to execute this within next 12 months.
Management had subscribed to Rs 120 cr warrants @ Rs 830/ share. 25% as per the requirements has already been infused. Company will now take a call whether to put the money through warrants into the business or buy at a much lower valuation from open market. Decision will be maximum taken within next 1 week.

As regards BlueSmart subsidiary, Company claims that all the debt obligation are being paid on time and the funding round of Rs 400 is closed. 75% has already come in and balance 25% will come in near term.

Promoters have army background. They came on TV to explain in detail. Responses seemed ok but over bullish (lenders committed to not dump the stock, 90 day rating upgrade, huge order book, timeline to execute these orders etc). Their capability to manage finances is a key monitorable.

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