Gensol's West Asia operations look to separate from parent, mitigate fallout from India scrutiny
Amidst mounting scrutiny over alleged financial irregularities in India, embattled solar power EPC (engineering, procurement, and construction) company Gensol Engineering Ltd's West Asia operation is exploring a potential separation from the parent company.
Two people aware of the development said that the Dubai-headquartered middle-east arm, which holds significant solar project contracts worth AED 175 million (
₹
406.75 crore), is considering the move to mitigate the fallout from its India troubles.
'There is a plan being discussed to delink
Gensol's
West Asia operations from the parent company to sequester it from the India fallout,"one of the two people cited above said, requesting anonymity. 'The plan also includes returning AED 25 million to the parent company."
The AED 25 million (
₹
58.10crore) had been initially transferred by the Ahmedabad-headquartered company to establish its MENA (middle east and north Africa) presence, which includes subsidiaries such as Green Energy Trading LLC-FZ-UAE and Gensol Renewables DW LLC-UAE.
Experts believe such a separation is feasible under certain conditions. 'Any plan of hiving off an arm of a company in such instances can be taken up as long as the company is not admitted to insolvency resolution," said Manoj Kumar, partner and head of M&A and investment banking at Corporate Professionals. 'In case of insolvency, any related-party transaction over the past two years would be scrutinized and any non-related party transaction over the past one year period would be thoroughly scrutinized."
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|
Gensol promoters lose over half of their ownership
Kumar added that in case Sebi or the enforcement directorate, which have power to seize assets, decide to seize them, then such a transaction of separation would be difficult to go through. But till the time there is no embargo on the assets, a transaction of separation or hive off can be taken up."
Meanwhile,
Mint
reported earlier that PFC is looking at multiple options to recover its dues, including filing an insolvency petition at the National Company Law Tribunal. PFC on Tuesday said it has filed a complaint with the Economic Offences Wing of the Delhi Police over alleged submission of falsified documents by Gensol.
Queries emailed to the spokesperson of Gensol Engineering Ltd on Tuesday remained unanswered till press time.
The development comes in the backdrop of the Indian government evaluating all green energy project contracts awarded to Gensol to ensure their timely completion and, if required, rebidding of the EPC contracts won from state-run firms.
The government's move followed an interim order by India's market regulator Sebi (Securities and Exchange Board of India) barring Gensol's promoters–
Anmol Singh Jaggi
and Puneet Singh Jaggi–from trading in the securities market, and from holding any key managerial post in Gensol or any other listed company. Additionally, Gensol's planned 1:10 stock split has been halted, and a forensic audit has been ordered.
Sebi in its investigation had found that the founders of the cleantech company had siphoned off loans availed from state-run lenders Power Finance Corporation and Indian Renewable Energy Development Agency (Ireda) for non-related and personal expenses. It also found the company forged documents to show that it was regular in servicing its debt towards the lenders.
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|
Gensol won many PSU contracts. Here's what happens to them
Further, Sebi's interim order highlighted the broader implications of the financial irregularities, stating, 'While the fund diversion primarily occurred in the context of electric vehicle (EV) purchases intended for leasing to a related party, the risk it creates is neither isolated nor contained. The company has a substantial order book, comprising critical infrastructure contracts awarded by government and public sector entities in the renewable EPC space. These contracts are not just capital intensive–they also require strict financial discipline, timely execution, and reputational credibility to retain project flow and institutional trust."
Established in 2012, Gensol Engineering Ltd has been operating in the solar power EPC services space, along with electric mobility solutions. According to its annual report for FY24, it has a team of more than 500 professionals across solar (Gensol Solar EPC -- India & Middle East -- and Scorpius Trackers), EV (electric vehicle) leasing and EV manufacturing.
In the annual report, the company said it has expanded its footprint internationally with EPC projects in the UAE and other regions. 'We secured a 23.2MWp (megawatt-peak) solar project in the UAE, showcasing our competitive positioning and leveraging strategic partnerships in high-potential markets," the company said.
And read
|
How did Gensol's lenders miss a
₹
262-crore gap for more than a year?
Gensol's net profit for the nine months ended December 2024 was
₹
78.31 crore, compared to
₹
51.40 crore in the year ago period, according to its Q3 FY25 financial results filed with the exchanges. Its total revenue was
₹
1,053.02 crore, 42% higher than
₹
740.98 crore in the year ago period. As of December 2024, the company had an unexecuted orderbook of about
₹
7,000 crore, showed its investor presentation for Q3 FY25.
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