Gensol Engineering’s promoters have offloaded 2.37% of their stake, equivalent to 9 lakh shares, to generate liquidity for reinvestment into the business. This decision comes in the wake of a staggering 70% drop in the company’s stock over the past eight trading sessions, raising concerns about its financial stability.

In a regulatory filing, the company stated, “The promoters have divested approximately 2.37% of total equity shares, amounting to 9,00,000 shares, to unlock liquidity, which will be reinvested into the business through equity infusion. This strategic move aims to strengthen the company’s balance sheet and ensure financial stability.”

The promoters plan to reinject the capital through a warrant subscription round executed on June 18, 2024, providing additional growth capital. Despite the stake sale, they continue to hold a majority stake of 59.70% in Gensol Engineering.

Meanwhile, the company is set to explore a stock split and various fundraising measures, including equity issuance and foreign currency convertible bonds, at its upcoming board meeting on March 13.

Gensol’s stock decline, which began in late February, intensified following multiple credit rating downgrades by CARE and ICRA. On Thursday, ICRA downgraded the company’s Rs 2,050 crore loan facilities, with its long-term fund-based term loan of Rs 925 crore and fund-based cash credit of Rs 718.5 crore being revised from [ICRA]BBB- (Stable) to [ICRA]D. Additionally, its long-term and short-term bank guarantee (BG) facilities totaling Rs 406.5 crore, along with a sub-limit BG of Rs 51.3 crore, were downgraded from [ICRA]BBB- (Stable)/[ICRA]A3 to [ICRA]D.

CARE Ratings followed suit, cutting Gensol’s Rs 716 crore bank facilities to CARE D, signaling default or high credit risk. Its long-term bank facilities of Rs 639.7 crore were downgraded from CARE BB+ (Stable) to CARE D, while the long-term/short-term bank facilities of Rs 76.3 crore were reduced from CARE BB+ (Stable)/CARE A4+ to CARE D.

Further adding to investor concerns, Gensol Engineering’s Chief Financial Officer (CFO), Ankit Jain, has resigned and will be succeeded by Jabirmahendi Mohammedraza Aga. On Friday, Gensol’s shares closed 4.2% lower at Rs 321.20 on the BSE.