No respite! Gensol Engineering falls another 10% after company's address on credit downgrades; check details

The company's statement failed to allay investors' concerns.

The stock is down over 34% in one week (as of the March 5 close), per BSE data.

Shares of the company came under pressure after rating agencies CARE and ICRA recently downgraded the company's credit ratings.

Addressing the downgrades, Gensol Engineering Ltd. (GEL) on Wednesday said proceeds from the series of asset divestments will be used to reduce debt.

Acknowledging the credit rating downgrades by CARE and ICRA, the firm said that it has happened due to a short-term liquidity mismatch, which is improving by way of customer payments.

"That said, we understand the concerns these downgrades have raised and are committed to addressing them responsibly to all our stakeholders," it said in a statement.

The firm denied involvement in "falsification claims" and said it would be setting up a committee to comprehensively review the matter. "This underscores the company's commitment to accountability, transparency, and sustainable business practices."

Gensol said it had strong financials with an order book of more than ₹7,000 crore, 42% growth in revenue to ₹1,056 crore in the first nine months of the current fiscal year, 89% EBITDA growth to ₹246 crore, and a 34% rise in profit to ₹67 crore.

"These are challenging times, and we are taking decisive steps toward strengthening our financial position and ensuring long-term financial stability," it said.

The total current debt stood at ₹1,146 crore against the reserves of ₹589 crore, making it a debt-equity ratio of 1.95.

"In the current financial year, we have reduced our debt obligation by ₹230 crore," the company said, adding that it has initiated a series of asset divestments to significantly reduce debt.

Downgrade updates

On March 4, CARE Ratings downgraded the company to default from the previous “BB+.”

Further, it downgraded Gensol’s long-term bank facilities worth ₹639.7 crore to “CARE D” from the previous “CARE BB+” with a stable outlook. Furthermore, it also revised its ratings lower for other long-term/short-term bank facilities from “CARE BB+” with a stable “CARE A4+” outlook to “CARE D.”

On March 5, ICRA Ratings downgraded the bank facilities of Gensol Engineering Limited (GEL) to [ICRA]D following feedback received by ICRA from the company’s lenders about the ongoing delays in debt servicing.

ICRA notes that Gensol Engineering has delayed in its debt servicing obligations as per feedback received from the lenders.

"GEL, in its latest public disclosures as well as in its recent communications with ICRA, had highlighted sizeable available liquidity to support its operations during its ongoing growth phase. GEL had also been sharing no-default statements with ICRA at the beginning of every month, suggesting timely debt servicing. However, ICRA has now learnt that certain documents shared by GEL with ICRA on its debt servicing track record were apparently falsified, which raises concerns about its corporate governance practices, including its liquidity position," ICRA said.

Further, delays in debt servicing by more than 15 days to the bondholders of Blusmart in February 2025 point to lapses in liquidity management within the group, ICRA added.