Harsh Shah resigns as Azure Power CEO within 2 months of appointment

In a statement, the company announced the appointment of Rupesh Agarwal as its Acting Chief Executive Officer (CEO). The board will consider appointment of a new permanent CEO in due course, it said. Agarwal had joined the company earlier this month as Chief Strategy & Commercial Officer.

Alan Rosling, Chairman of the board, said: “The board very much regrets Harsh’s unexpected decision to leave the company after joining only from July 1, 2022. We wish him well for the future.“

The resignation comes at a time when closing of the company’s accounts for FY22 have been. In its statement, Azure expressed inability to give a timeline for submission of its annual report on ‘Form 20-F’ from 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 1 August and the extended deadline was 16 August.

In a statement on 12 August, 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.

The New York Stock Exchange website said that 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.”

On 23 August, Moody’s Investors Service placed Azure Power Energy Ltd’s (APE) Ba2 senior unsecured rating and Azure Power Solar Energy Private Ltd’s (APSEP) Ba1 backed senior unsecured rating on review for downgrade days after the company announced the inability to file the annual report by the extended deadline.

APE and APSEP are wholly-owned subsidiaries of Azure Power Global.

 “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,” Moody’s said.

Shah had taken over as the CEO of the company on July 1, 2022 after the former CEO Ranjit Gupta and Chief Operating Officer Murali Subramanian resigned in April.

The resignation comes a month ahead of the annual meeting of its shareholders. In a statement on 23 August, the company announced to hold its annual general meeting on 30 September.

In its statement on Monday, the company also said that it had received a whistleblower complaint in May 2022 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, and it has implemented mechanisms to remediate them and in so doing strengthen safety and quality protocols,” it said.

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, it said. The company is implementing immediate remedial measures, and Azure is initiating disclosure of the findings to the appropriate authorities, said the statement.

The company is backed by Canadian pension funds, CDPQ and Ontario Municipal Employees’ Retirement System (OMERS) along with International Finance Corporation (IFC), a member of the World Bank Group.

In August last year, OMERS purchased a 19.4% stake in the company for $219 million from IFC and IFC GIF Investment Company I.

In May this year, it announced the appointment of Delphine Voeltzel, Managing Director at OMERS Infrastructure, to its board.

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