The crash accelerated after rating agencies ICRA and CARE downgraded Gensol Engineering’s credit rating to default. ICRA cited debtservicing documents submitted by Gensol that it said were “apparently falsified.” This will be investigated, said Anmol Jaggi, Gensol Engineering’s chairman and managing director and cofounder of BluSmart.
On Thursday, the company announced a Rs 600 crore fundraise to quell investors’ nerves.
“We are working on two areas,” Jaggi told ET. “A committee with independent external experts has been formed to investigate the falsification of documents charge. Neither me nor my brother will sit on that committee. We have announced a fundraise of Rs 600 crore through foreign currency convertible bonds and promoter contribution. We expect liquidity challenges for next the 90 days till when credit rating agencies can review their outlook.”
The board has approved a stock split in the ratio of 10:1. The promoters will exercise warrants at Rs 56 apiece for shares with a face value of Re 1 each. That amounts to Rs 560 at the existing face value of Rs 10 per share prior to the split. This is a premium of 113% to the current share price of Rs 262.
Gensol Engineering is a contractor for solar power projects but also has an electric vehicle leasing business. It has leased 5,500 vehicles to BluSmart.
‘GOOD TRACK RECORD’
When asked if the pressure of BluSmart’s operations was being borne by Gensol Engineering’s balance sheet, Jaggi said the arrangement was already in the process of being wound down. He said the company’s solar project contracting business was secure and had predominantly public sector companies as customers. “From April 1, 2024, no additional vehicles have been leased from Gensol Engineering to BluSmart,” he said. “Also 3,000 vehicles are being sold out of those 5,500.” He said a Big Four accounting firm had been engaged to ensure related-party transactions between his two companies had taken place at arm’s length.
When asked how the freefall in the company’s stock price will be addressed, he said its track record has been good. “When we started in 2019, we were doing Rs 60 crore in annual revenue,” he said. “Today, we are doing Rs 60 crore in quarterly ebitda. Not once have we faced a liquidity issue. We are not an NPA.” He blamed the inability to raise equity by Gensol Engineering in a timely manner and payments to vendors in advance as reasons for the liquidity mismatch. He said there were no defaults in payments by Gensol’s customers.
BluSmart operates electric vehicles in three cities including Delhi, Bengaluru and Mumbai. Investors include BP ventures and the ResponsAbility fund, apart from family offices. It has raised Rs 1,000 crore capital so far since inception.
