New Delhi: Power Finance Corp. (PFC) and Indian Renewable Energy Development Agency (IREDA) are considering a plan to auction the electric vehicles (EVs) that financially troubled Gensol acquired by taking loans from the two public sector financial institutions, said people aware of the matter. Gensol's EVs were leased to ride-hailing service BluSmart.
Gensol and BluSmart are promoted by Anmol Singh Jaggi and Puneet Singh Jaggi. The brothers face a capital market ban and are barred from holding positions in listed companies after the market regulator accused them of fund diversion.
The lenders funded the purchase of over 5,000 vehicles, which are hypothecated to them. They are worried that Gensol will turn into a non-performing asset (NPA) because of the company's interconnected operations with BluSmart and debt resolution will take time once that happens.
The loans were serviced through lease payments from the ride-hailing service.
With BluSmart stopping rides on April 17, lease rentals will dwindle and the loan account can no longer be serviced, said sources aware of the matter.
The Securities and Exchange Board of India (Sebi) is conducting a detailed inquiry into the Jaggis and Gensol based on its preliminary findings.
Against this background, the lenders have decided to take steps to secure loans worth Rs 663 crore that were used to finance the purchase of EVs by Gensol. PFC and IREDA are said to be drawing up a list of potential buyers for the EVs.
PFC, IREDA, Gensol and BluSmart didn't respond to queries.
Credit rating agencies had downgraded Gensol's debt to D or 'status of default' in the first week of March. The lenders have not categorised the account as an NPA because they have been dipping into a debt-service reserve account that the company maintains with them to cover any shortfall in repayments, according to sources. Gensol had denied in an April 16 stock exchange filing it was in talks for a merger, acquisition or asset sale. Loans don't need to be immediately categorised as NPAs when repayments are missed. As per RBI's norms, assets that are overdue for more than 90 days need to be classified as non-performing," said Piyush Mishra, partner, Phoenix Legal. The company's future remains uncertain after the Jaggi brothers stepped down from the board and management after the Sebi April 15 order that accused them of diverting funds for personal uses such as buying a high-end apartment and a golf set.
The Jaggis have 21 days to file their replies. They also face charges of insider trading in the company's shares. "It is very much in the realm of probability that the lenders may initiate independent recovery against the company and promoters and seek to enforce security against encumbered assets," said Vaibhav Kakkar, senior partner, Saraf and Partners.
"The lenders can even call out an event of default against the pledged shares of promoters, independent of any investigations being carried out by the regulators."
The latest available stock exchange data show that the promoters hold a 62.65% stake in Gensol. Of the 23.8 million shares held by them 19.5 million are pledged, implying that 81.6% of promoters' holding is encumbered.
Gensol and BluSmart are promoted by Anmol Singh Jaggi and Puneet Singh Jaggi. The brothers face a capital market ban and are barred from holding positions in listed companies after the market regulator accused them of fund diversion.
The lenders funded the purchase of over 5,000 vehicles, which are hypothecated to them. They are worried that Gensol will turn into a non-performing asset (NPA) because of the company's interconnected operations with BluSmart and debt resolution will take time once that happens.
The loans were serviced through lease payments from the ride-hailing service.
With BluSmart stopping rides on April 17, lease rentals will dwindle and the loan account can no longer be serviced, said sources aware of the matter.
The Securities and Exchange Board of India (Sebi) is conducting a detailed inquiry into the Jaggis and Gensol based on its preliminary findings.
Against this background, the lenders have decided to take steps to secure loans worth Rs 663 crore that were used to finance the purchase of EVs by Gensol. PFC and IREDA are said to be drawing up a list of potential buyers for the EVs.
PFC, IREDA, Gensol and BluSmart didn't respond to queries.
Credit rating agencies had downgraded Gensol's debt to D or 'status of default' in the first week of March. The lenders have not categorised the account as an NPA because they have been dipping into a debt-service reserve account that the company maintains with them to cover any shortfall in repayments, according to sources. Gensol had denied in an April 16 stock exchange filing it was in talks for a merger, acquisition or asset sale. Loans don't need to be immediately categorised as NPAs when repayments are missed. As per RBI's norms, assets that are overdue for more than 90 days need to be classified as non-performing," said Piyush Mishra, partner, Phoenix Legal. The company's future remains uncertain after the Jaggi brothers stepped down from the board and management after the Sebi April 15 order that accused them of diverting funds for personal uses such as buying a high-end apartment and a golf set.
The Jaggis have 21 days to file their replies. They also face charges of insider trading in the company's shares. "It is very much in the realm of probability that the lenders may initiate independent recovery against the company and promoters and seek to enforce security against encumbered assets," said Vaibhav Kakkar, senior partner, Saraf and Partners.
"The lenders can even call out an event of default against the pledged shares of promoters, independent of any investigations being carried out by the regulators."
The latest available stock exchange data show that the promoters hold a 62.65% stake in Gensol. Of the 23.8 million shares held by them 19.5 million are pledged, implying that 81.6% of promoters' holding is encumbered.
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