Shares of Gensol Engineering Ltd (Gensol) plummeted 20% on 4 March 2025 and extended its decline by another 9.99% on 5 March 2025, following successive credit rating downgrades by CARE Ratings and ICRA. Gensol ended Wednesday 10% down at Rs372.6 on the BSE, while the 30-share benchmark Sensex closed 740 points up at 73,730, breaking a 10-day losing streak.
Gensol operates in the renewable energy sector, providing engineering-procurement-construction (EPC) services for solar projects. It is also involved in electric mobility, including electric vehicle (EV) leasing and manufacturing. As of 31 March 2024, it had eight subsidiaries and a reported order-book of over Rs7,000 crore, to be executed within the next 12–18 months.
ICRA has downgraded Gensol's rating to ICRA D for its total rated amount of Rs2,050 crore which includes long-term loans (Rs925 crore), cash credit (Rs718.5 crore) and bank guarantees (Rs406.5 crore). This is a sharp decline from its previous ICRA BBB- (stable) / ICRA A3 rating.
CARE Ratings also downgraded Gensol's long-term bank facilities worth Rs639.7 crore from CARE BB+ (stable) to CARE D. Additionally, Rs76.3 crore of long-term/short-term facilities were downgraded from CARE BB+ (stable) / CARE A4+ to CARE D.
Gensol had previously reported a liquidity position in its 13 February 2025 investor call. The management highlighted total liquidity of around Rs250 crore in the company's books and access to working capital limits between Rs350 crore and Rs400 crore. Of the total Rs250 crore in liquidity, half or about Rs125 crore was free cash balance readily available to the company.
However, ICRA has now learned that certain documents shared by Gensol regarding its debt servicing track record were apparently falsified. This raises significant concerns about the company's corporate governance practices and the accuracy of the previously reported liquidity position.
The discrepancy between GEL's public statements and the findings by ICRA casts doubt on the reliability of the information provided by the company's management team. In an effort to reduce its debt, Gensol entered into a strategic partnership with Refex Green Mobility Ltd, a subsidiary of the Refex group. Under a term-sheet dated 9 January 2025, Gensol agreed to transfer 2,997 electric vehicles to Refex. As part of the deal, Refex will take over Rs315 crore of loans linked to these vehicles from Power Finance Corporation Ltd.
Gensol claims this deal will help reduce its debt and release Rs300 crore worth of promoter-pledged shares. The company is also looking to carry out similar transactions in the coming quarters to further reduce debt. However, ICRA noted that the promoter’s share pledge increased to 85.5% by February 2025, up from 79.8% in September 2024. This raises concerns about Gensol’s financial flexibility, especially as its share price continues to decline.
Gensol is closely linked to Blusmart Mobility Private Ltd, a loss-making company that has recently delayed payments on its non-convertible debentures (NCDs). Gensol leases EVs to Blusmart and facilitates loans for Blusmart’s leasing operations. However, the lease rental payments from Blusmart have been delayed, causing liquidity stress for Gensol’s other business segments. CARE Ratings has flagged this as a risk in its latest report.
Gensol had planned to raise Rs900.1 crore through a preferential issue on 18 June 2024 to fund its expansion. However, due to undersubscription, it secured only Rs538.6 crore— Rs361.4 crore short of its target. The company had projected an equity inflow of Rs244 crore in FY24-25, but only Rs140 crore has been received, with the remaining Rs104 crore deferred until December 2025.
Additionally, the promoters’ stake has dropped from 62.65% in December 2024 to 62.09% in February 2025, following a Rs11.5 crore share sale. This raises further concerns about Gensol’s financial stability and ability to attract fresh equity.
Despite Gensol’s claims of having sufficient liquidity, it has come to light that some debt servicing documents submitted to ICRA were falsified. Furthermore, the company delayed debt repayments to Blusmart bond-holders for over 15 days in February 2025, indicating financial stress.
CARE Ratings confirmed delays in Gensol’s loan repayments and classified some accounts under the special mention account (SMA) category, which signals potential default risk. The company must demonstrate timely debt servicing for at least three consecutive months to improve its credit rating.
While Gensol claims a strong order book and strategic plans to reduce debt, its financial health remains uncertain. The combination of credit downgrades, liquidity concerns and alleged falsification of financial documents has shaken investor confidence. The company’s ability to recover will depend on how effectively it can manage debt, improve cash-flow and regain market trust.
