Gensol Engineering Unveils ₹600 Crore Capital Plan, Announces Stock Split

Gensol Engineering Ltd. has announced a fundraise of Rs 600 crore to enhance its financial stability and achieve a zero net debt target. The company's board approved raising approximately Rs 400 crore through Foreign Currency Convertible Bonds (FCCBs) and an additional Rs 200 crore via the issuance of warrants to promoters.

This initiative, coupled with ongoing divestments, including the sale of vehicles and a subsidiary, is aimed at significantly improving Gensol's debt-equity ratio. These strategic moves are expected to bolster the company’s financial resilience and position it for long-term growth.

Debt-Equity Ratio Set for Major Improvement

Currently, Gensol Engineering has a debt of Rs 1,146 crore against reserves of Rs 589 crore, resulting in a debt-equity ratio of 1.95. With the Rs 600 crore fundraise, the company's reserves are expected to increase to around Rs 1,200 crore.

Additionally, the company is in the process of divesting assets worth Rs 615 crore, which will bring down its total debt to approximately Rs 530 crore. As a result, the debt-equity ratio will improve significantly to 0.44, according to the company’s filing with stock exchanges.

Focus on Financial Discipline and Growth

Speaking on the development, Anmol Singh Jaggi, Managing Director of Gensol Engineering, emphasized the company’s commitment to strengthening its balance sheet.

"Our foremost priority is to fortify Gensol’s financial position, and we are taking bold and decisive steps to achieve it, starting with this fundraise. The Rs 600 crore capital infusion, along with strategic divestments, will be instrumental in positioning the company for sustainable growth," said Jaggi.

He also reiterated the company’s dedication to delivering value to shareholders and achieving a net-debt zero status while maintaining financial discipline. "For years, we have provided high returns to our shareholders, and we remain committed to unlocking even greater potential for our investors," he added.

Approval for Stock Split and Other Issuances

The board also approved a stock split, reducing the face value of each share from Rs 10 to Rs 1 by splitting one existing share into ten. The record date for the stock split will be announced following shareholder approval.

Gensol has never conducted a stock split before. However, the company issued a 2-for-1 bonus in October 2023 and a 1-for-3 bonus in October 2021.

Furthermore, Gensol will seek shareholder approval to issue convertible bonds, American Depositary Receipts (ADR), and Global Depositary Receipts (GDR) worth up to $50 million.

Stock Performance and Market Reaction

Despite these strategic announcements, Gensol Engineering shares opened at a lower circuit of 5 per cent today. The stock has already declined more than 75 per cent from its recent highs.