Taking cognisance of allegations of falsification of documents by Ahmedabad-based Gensol Engineering Ltd (Gensol), market regulator Securities and Exchange Board of India (SEBI) has decided to appoint a forensic auditor to examine the company's books, citing serious financial irregularities, misappropriation of funds\ and misleading disclosures. SEBI barred the company promoters and chief executive officer (CEO) Anmol Singh Jaggi and Puneet Singh Jaggi from markets besides restricting them from being appointed directors of any other listed company. It also put on hold the stock split announced by Gensol till further notice.
SEBI's order comes after a detailed investigation revealed prima facie evidence of large-scale diversion of funds by the Gensol’s top executives through a web of related parties. It asked the forensic auditor to submit the report within six months.
In an order, Ashwani Bhatia, whole-time member (WTM) of SEBI says, "What has been witnessed in the present matter is a complete breakdown of internal controls and corporate governance norms in Gensol, a listed company. The promoters were running a listed public company as if it were a propriety firm. The Company's funds were routed to related parties and used for unconnected expenses, as if the Company's funds were promoters' piggybank. The result of these transactions would mean that the diversions mentioned above would, at some time, need to be written off from the Company's books, ultimately resulting in losses to the investors of the Company."
"In the instant case, prima facie evidence of blatant violation of rules of corporate governance is 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 or individuals," the SEBI WTM says.
SEBI also noted that the promoter holding in Gensol has already come down substantially to 35% as of 31 March 2025 from 70.72% in FY19-20 and there is a risk of the promoters Jaggis further off-loading the shares on gullible investors. "Thus, investors need to be made aware of the alleged wrongdoings detailed above through regulatory action. At the same time, allowing Anmol Singh Jaggi and Puneet Singh Jaggi to remain at the helm of affairs as directors or key management personnel (KMPs) in the Company is likely to do further damage to the interests of the Company."
Gensol recently announced stock split of its shares in the ratio of 1:10, which is likely to attract more retail investors to the scrip. "At this stage, allowing this corporate action may not be in the interest of the investors. Gensol is directed to put on hold the stock split announced by it," the SEBI WTM says.
Last month, ICRA and CARE Rating downgraded the ratings assigned by them for fund-based and non-fund-based credit facilities availed by Gensol to 'D' due to delays by the Company in servicing debt obligations.
The market regulator found that funds raised by Gensol through loans from public financial institutions, notably the Indian Renewable Energy Development Agency (IREDA) and Power Finance Corporation (PFC), intended for the procurement of electric vehicles (EVs), were siphoned off through layered transactions. These included alleged payments towards personal luxury real estate purchases, foreign currency transactions, and investments in related entities.
Notably, SEBI’s probe found that although the company secured loans to purchase 6,400 EVs, it procured only 4,704, with significant discrepancies in fund deployment. A key supplier, Go-Auto, acted as a conduit for routing the funds to various related parties, including Capbridge Ventures LLP and Gensol Ventures Pvt Ltd—entities controlled by the Jaggi brothers.
Gensol also came under fire for making allegedly misleading stock exchange announcements, including exaggerated claims about EV pre-orders and a non-binding agreement for the sale of its US subsidiary. SEBI found no active manufacturing activity at the company’s EV plant in Pune, despite claims of large-scale operations.
Further compounding the issue, the company failed to disclose multiple loan defaults and submitted falsified documents to credit rating agencies in an attempt to cover up its financial instability. Promoters are also accused of using Wellray Solar Industries Pvt Ltd, a connected entity, to trade in Gensol’s shares, raising concerns over market manipulation.
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