State-owned Indian Renewable Energy Development Agency (IREDA) has filed a complaint with the Economic Offences Wing (EoW) against Gensol Engineering, alleging contract violations and falsified documentation. The lenders accuse promoters of diluting their shareholding without approval, a breach of loan agreements.
Why IREDA Initiated the Complaint
IREDA’s action follows an internal review of its loan sanctioned to BluSmart Mobility (a Gensol associate) for purchasing electric vehicles. The account is currently “under stress” due to halted lease payments after operations were suspended. While not yet classified as a non-performing asset (NPA), lenders fear defaults if recoveries fail.
Key Allegations Against Gensol
- Unauthorized Shareholding Dilution: Promoters reduced their stake without lender consent, violating contractual terms.
- Document Fraud: IREDA clarified it did not issue letters referenced by credit rating agencies, hinting at forged paperwork.
- Fund Diversion: Regulatory authorities have raised concerns over the alleged misuse of loans.
Parallel Complaint and Exposure
Another lender disclosed a significant portion of its loan to Gensol remains unpaid. Multiple financial institutions have approached the EoW, signaling coordinated efforts to recover dues.
Impact on Promoters and Collateral Risks
Promoters hold a majority stake in Gensol, with a large portion of their shares pledged as collateral. Legal actions and regulatory restrictions have intensified scrutiny on their roles in listed firms.
IREDA’s internal committees are evaluating collateral recovery options. The lender has urged stakeholders to avoid speculation until the review concludes.
Market Reaction and Share Price Fall
Shares of involved entities have experienced volatility, reflecting investor concerns over financial health and governance risks. The case highlights risks in green-energy financing and promoter governance. With rising EV sector loans, lenders may tighten due diligence to avoid similar defaults.
