The resignation comes at a time when closing of the company’s accounts for FY22 has not been completed. In its statement to the SEC, Azure expressed inability to give a timeline for submission of its annual report on ‘Form 20-F’ for the financial year ending March 2022. “The company reiterates that it is working in close consultation with its advisers to close its annual accounts,” it said.
The original deadline for filing of the annual report with the US Securities and Exchange Commission (SEC) was August 1 and the extended deadline was August 16. In a statement on August 12, the company had said that the delay in filing the 2022 Form 20-F is due to the company’s ongoing review of its internal control and compliance framework.
Such delays have already led to the New York Stock Exchange claim Azure is “noncompliant with quantitative/qualitative continued listing standards or is delayed in filing an annual or interim report required pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934,” as per its website.
So far this year, the stock is down 62%. The company’s current market capitalisation stands at $405.5 million.
Since May this year, the company has also been besieged by a whistleblower complaint alleging potential procedural irregularities and misconduct by certain employees at a plant belonging to one of its subsidiaries. As part of the company’s review of these allegations, it discovered deviations from safety and quality norms. Azure said it has implemented mechanisms to remediate them and is strengthening safety and quality protocols.
“Azure’s audit committee, with the assistance of legal counsel and forensic accounting support, also identified evidence of manipulation of project data and information by certain employees. The company is implementing immediate remedial measures, and Azure is initiating disclosure of the findings to the appropriate authorities,” it said in a disclosure on Monday.
Credit rating agency Moody’s downgraded Azure Power and one of its solar affiliates last week. “Governance risks are material to the rating action. The company has also experienced senior management turnover recently. The internal review and the delay in filing Form 20-F are additional governance considerations material to the rating action,” said Abhishek Tyagi, analyst at Moody’s.
The company — with a solar portfolio of 7,425 MW (including 43 MW under construction and 4,470 MW committed solar plants) across 23 states in India as of July 2022 — is among the leading renewable platform backed by Canadian pension fund CDPQ that has a 53.4% shareholding in the company. Canada’s Omers Infrastructure had acquired a 19.4%,stake last year while the remaining is held among public shareholders.
The company is also facing two public interest litigations regarding power power purchase agreements (PPA) for its 2.3 GW projects under the manufacturing linked tender of 4,000 MWs.
The cases have been filed in the High Court of Andhra Pradesh, challenging various aspects of the manufacturing tender and seeking to quash the Andhra Pradesh Regulator’s approval for procurement of capacity tied up with SECI. The tariff adoption for the capacities by the Central Electricity Regulatory Commission has also been made subject to the outcome of the PILs. Azure said it is evaluating the impact of these PILs.
In a statement, the company announced the appointment of Rupesh Agarwal as acting CEO. The board will consider appointment of a new permanent CEO in due course, it said. Agarwal joined earlier this month as chief strategy & commercial officer.
“The Board very much regrets Harsh’s unexpected decision to leave the Company after joining only from July 1, 2022,” Alan Rosling, Chairman of the Board, said.
Shah had joined the company from IndiGrid, the KKR and Sterlite Power backed power invIT, and is joining back his old firm.
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