Gensol Engineering Limited (GEL), a key player in India's renewable energy and electric vehicle (EV) manufacturing sectors, has faced a major setback as its credit rating has been downgraded by ICRA. The rating downgrade to [ICRA]D follows reports of ongoing delays in debt servicing, raising concerns about the company’s financial health and corporate governance standards.

Reasons for Downgrade

ICRA’s decision comes after receiving feedback from GEL’s lenders regarding delays in meeting financial obligations. The company had earlier assured stakeholders of its liquidity strength, citing Rs. 250 crore in available cash, but recent findings suggest discrepancies in its reported financial status. ICRA also found that certain documents submitted by GEL regarding its debt servicing track record were falsified, casting doubt on the company’s governance and transparency.

Another major concern is the increasing pledge of promoter shares, which has risen from 79.8% in September 2024 to 85.5% in February 2025. This signals a weakening financial position, potentially restricting GEL’s ability to secure additional funding.

Financial and Business Performance

Despite the downgrade, GEL maintains a healthy order book of over Rs. 7,000 crore, primarily from government and reputed private players in the solar EPC sector. However, funding constraints and delays in execution pose risks to revenue growth and operational stability.

The company’s total debt stands at Rs. 1,512 crore as of March 2024, with a debt-to-EBITDA ratio of 6.6x and an interest coverage ratio of 2.1x, reflecting financial stress. The delay in a planned Rs. 244 crore equity infusion further exacerbates liquidity challenges.

Impact on Group Companies

GEL’s financial woes are compounded by challenges at Blusmart Mobility, a group company engaged in EV-based transportation. Blusmart recently defaulted on its Non-Convertible Debenture (NCD) payments, further straining GEL’s financial flexibility. The group's ambitious EV manufacturing expansion in Pune, aimed at producing two-seater fleet cars and cargo vehicles, also faces funding risks.

Future Outlook

While GEL remains optimistic about its long-term growth prospects, the immediate future looks uncertain. The company’s ability to raise capital, reduce debt, and execute its large order book will be critical in regaining financial stability. ICRA has indicated that the rating may be upgraded if GEL ensures timely debt servicing for a continuous period of three months.

Gensol Engineering's management has assured stakeholders that they are actively working on strengthening their balance sheet and improving liquidity. However, unless the company successfully navigates its financial and governance challenges, it may face further downgrades and operational hurdles.

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