Facing rating downgrades and liquidity challenges, Gensol Engineering’s board has approved fund raising initiatives totalling Rs 600 crore to reduce debt and improve its debt-equity ratio. The company also announced a stock split in the ratio of 1:10, even as its shares have plummeted approximately 55% over the past 13 trading sessions.
The fund raising plan includes Rs 400 crore through the issuance of Foreign Currency Convertible Bonds (FCCBs) and Rs 200 crore through warrants to promoters, priced at Rs 56 per warrant after adjusting for the stock split.
Gensol stated that these measures reflect its commitment to sustainable growth, debt reduction, and maximising stakeholder value. Combined with ongoing divestments, including the sale of vehicles and a subsidiary, the initiatives are expected to significantly improve the company’s financial health and long-term resilience.
As of now, Gensol Engineering’s debt stands at Rs 1,146 crore against reserves of Rs 589 crore, resulting in a high debt-equity ratio of 1.95. The Rs 600 crore fund raising is expected to boost reserves to approximately Rs 1,200 crore. Additionally, with Rs 615 crore worth of divestments underway, the company projects its debt will reduce to around Rs 530 crore, leading to a healthier debt-equity ratio of 0.44.
“Our foremost priority is to strengthen Gensol’s balance sheet, and we are taking bold and decisive steps to address it, starting with this fundraising,” said Anmol Singh Jaggi, Managing Director of Gensol Engineering.
The renewable energy company recently faced multiple rating downgrades due to delays in servicing its term loan. ICRA accused Gensol of falsifying debt servicing documents and downgraded its rating to ‘default’ based on lender feedback. Similarly, CARE Ratings downgraded the company from ‘BB+’ to ‘default.’
Amid these challenges, Ankit Jain, Chief Financial Officer (CFO), resigned from his position recently.
Gensol stated that the record date for the stock split will be announced after obtaining shareholder approval. The company’s shares have declined by about 55% in the past 13 sessions and are down nearly 77% from their all-time high. On Thursday, the stock closed 5% lower at Rs 261.70.