Bank Guarantee for Solar PV Project Invoked and Encashed by MSEDCL Against India Power Corporation Limited
India Power Corporation Limited (IPCL), a subsidiary related to DPSC Limited, has seen the invocation and encashment of a Bank Guarantee (BG) amounting to INR 6.65 Crore by the Maharashtra State Electricity Distribution Company Limited (MSEDCL). This relates to an earlier awarded solar power project that was subject to ongoing legal proceedings before the Maharashtra Electricity Regulatory Commission (MERC).The BG was furnished in favour of MSEDCL following a Letter of Award dated September 25, 2024, for a 133 MW Solar PV Project. Initially, DPSC Limited provided the guarantee backed by a Fixed Deposit with 100% margin. Subsequently, Parmeshi Urja Limited (PUL), which was incorporated as a wholly owned subsidiary, developed the project. Pursuant to the Business Transfer Agreement dated June 2, 2025, ownership of PUL and associated assets and liabilities, including the BG and Fixed Deposit, were transferred to IPCL Power Limited, another wholly owned subsidiary.
The Bank Guarantee was invoked by MSEDCL on April 1, 2026, citing non-achievement of Financial Closure. Following this invocation, PUL obtained interim protection against encashment from the Bombay High Court. This interim protection was subsequently vacated by MERC vide its Order dated August 12, 2026.
The BG was ultimately encashed by Karur Vysya Bank Ltd (KVB) on August 14, 2026, following the vacation of the interim protection by MERC. The invocation and subsequent encashment have an adverse financial impact of INR 6.65 Crore on IPCL.
The details of the invocation are as follows:
| Metric | Details |
|---|---|
| Beneficiary | Maharashtra State Electricity Distribution Company Limited (MSEDCL) |
| Issuing Bank | Karur Vysya Bank Ltd (KVB) |
| BG Number | QI0IBGP242830001 dated 09.10.2024 |
| Original Amount of BG | INR 6.65 Crore |
| Amount Invoked / Encashed | INR 6.65 Crore |
| Reason for Invocation | The BG was invoked by MSEDCL on April 1, 2026, due to the non-achievement of Financial Closure. |
| Impact | Adverse financial impact of ₹6.65 crores |
The main Petition filed by PUL before MERC remains pending. In its order dated August 12, 2026, MERC observed that if PUL ultimately succeeds in the main Petition, the monetary impact of the encashment may be addressed through restitution of the encashed amount along with appropriate interest.
DPSCLTD Stock Price Movement
Shares of DPSC Limited on Friday slipped by 0.68% to settle at ₹7.32, following a slight dip from the previous close. The equity saw trading volume reach 62,112 shares during the session.Disclaimer: Due care and diligence have been taken in compiling and presenting news and market-related content. However, errors or omissions may arise despite such efforts.
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