SEBI issues interim order against Gensol on suspicion of diversion of funds
According to the interim order, promoter and directors of Gensol, Anmol Jaggi and Puneet Jaggi, have been restrained from holding positions at Gensol, and the company’s stock split has to be put on hold.
The Securities and Exchange Board of India on Tuesday issued an interim order against Gensol Engineering after an investigation showed that the firm was involved in the “misutilisation and diversion of funds of the company in a fraudulent manner by its promoter and directors, Anmol Singh Jaggi and Puneet Singh Jaggi.”
The investigation was triggered after credit rating agencies, namely CARE Rating and ICRA, sought term loan statements from Gensol. However, the company withheld statements from the Indian Renewable Energy Development Agency (IREDA) and the Power Finance Corporation (PFC).
Instead, Gensol shared conduct letters from these firms stating that the company had been regularly servicing its debt. Notably, BluSmart—the EV ride-hailing company that leased the majority of its cars from Gensol—had reportedly defaulted on Rs 30 crore of bonds in early February this year. However, the company had said that bond payments were made.
Upon further investigation, both IREDA and PFC denied issuing the conduct letters. This triggered further investigation, which exposed that the firm raised loans from institutions like IREDA and PFC to buy electric vehicles, but only used a portion of these funds for the same.
An amount of Rs 262.13 crore remains unaccounted for, according to SEBI's detailed analysis of the company’s bank statement as well as that of Go-Auto Private Limited—the dealer that supplied EVs to the company.
According to the document, a portion of these unaccounted funds was used for personal expenses of the promoters, including the purchase of high-end real estate, and was transferred to close relatives of promoters.
“The promoters were running a listed public company as if it were a proprietary firm,” the market watchdog noted.
These transactions, SEBI noted, would need to be, at some time, written off from Gensol’s books, ultimately resulting in losses to the investors of the company.
Additionally, SEBI also took note of the recent 1:10 stock split Gensol had announced. The watchdog noted that this step will likely attract more retail investors, which, considering the results of the investigation, would not be in the interest of the investors. SEBI issued that the stock split be put on hold.
Shares of Gensol were down about 2.3% at Rs 130.15 apiece on April 15.
Edited by Kanishk Singh