Launching a crackdown on Gensol Engineering Ltd (GEL), India’s capital market regulator, the Securities and Exchange Board of India (SEBI), has barred the renewable energy firm and two of its promoters -- Anmol Singh Jaggi and Puneet Singh Jaggi -- from the securities markets till further orders in a fund diversion and governance lapses case.
“The prima facie findings have shown misutilisation and diversion of funds of the Company in a fraudulent manner by the promoter directors, Anmol Singh Jaggi and Puneet Singh Jaggi, who are also the direct beneficiaries of the diverted funds,” said Sebi in a 29-page order signed by Ashwani Bhatia, whole-time director of SEBI.
SEBI has also accused Gensol of misleading them, the credit rating agencies, the lenders and the investors by submitting forged Conduct Letters. It stated that there is prima facie evidence of a blatant violation of rules of corporate governance writ large over the workings of the Company.
“The diversion of funds of the Company by promoter entities reflects a culture of weak internal control, where even ring-fenced borrowings from institutional creditors were rerouted at the total discretion of the promoters. The internal controls at Gensol appear to be loose and through the quick layering of transactions, funds have seamlessly flowed to multiple related entities/individuals,” the order stated.
SEBI has also prohibited the two promoters from holding a directorial or key management personnel position in the engineering firm until further notice. Further, the regulator ordered Gensol Engineering to put a hold on the 10:1 stock split its board had approved on Saturday, April 12.
In June 2024, the market watchdog received a complaint related to the manipulation of share price and diversion of funds from GEL and thereafter launched a probe. SEBI directed the firm to appoint a forensic auditor to examine the books of accounts of Gensol and its related parties. The auditor will have to submit the report in six months.
The probe showed that Gensol Engineering had availed Rs 977.75 crore in term loans from institutions like IREDA and PFC. Of this sum, Rs 663.89 crore was earmarked for purchasing 6,400 electric vehicles (EVs). However, the company purchased only 4,704 vehicles worth Rs 567.73 crore. It stated that an amount of Rs 262.13 Crore remains unaccounted.
The probe also showed that the first instance of default by Gensol occurred on December 31, 2024. The Company, however, continued to submit statements to the CRAs certifying there was no delay or default in servicing any loans.