Capital markets regulator Sebi has issued an interim order against Gensol Engineering and its promoters — Anmol Singh Jaggi and Puneet Singh Jaggi — after finding issues of financial mismanagement and fund diversion.
The market watchdog has temporarily barred the promoters from acting as directors or key managerial personnel, and prohibited Gensol and other entities from trading in the securities market until further notice.
The order follows a detailed probe that began after complaints of share price manipulation and default in loan repayments.
In a strongly worded order Sebi said, there is complete breakdown of internal controls and corporate governance norms in Gensol as a listed company. "The promoters were running a listed public company as if it were a propriety firm."
Sebi said Gensol had raised Rs 975 crore in loans from institutions like IREDA and PFC for buying electric vehicles. However, only a part of the money was actually used for that purpose.
The probe by the regulator showed that more than Rs 200 crore was routed through a car dealer and cycled back to promoter-linked entities. Some of it was used for unrelated personal expenses, including buying luxury real estate.
"The company’s funds were routed to related parties and used for unconnected expenses, as if the company’s funds were promoters’ piggybank. The diversions would mean they need to be written off from the company’s books, ultimately resulting in losses to the investors," Sebi said.
In addition, Sebi has also found that Gensol submitted forged documents to credit rating agencies to falsely claim timely debt repayments.
The diversion of funds of the company by promoter entities reflects a culture of weak internal control, according to the regulator, 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," the regulator said.
Sebi took note of the recent stock split of 1:10 announced by the company and acknowledged that this might attract more retail investors to the scrip. Hence, it issued an interim order to protect the interests of the investors and preserve market integrity.
The regulator also cautioned investors to be careful while investing their savings in the capital markets.
Gensol Engineering is engaged in the business of providing engineering, procurement and construction (EPC) services in the renewable energy sector, primarily focusing on solar power projects.
In addition to its core consulting and EPC business, the company has diversified into leasing electric vehicles and has positioned itself as a player in India’s growing clean mobility segment.
Its financials have grown impressively over the past few years. On a standalone basis, the sales have grown from Rs 61 crore in FY17 to Rs 1,152 crore in FY24. During the same period, operating profit went up from Rs 2 crore to Rs 209 crore and net profit from Rs 2 crore to Rs 80 crore.
Interestingly, from FY20-FY25, the promoter holding came down from 70.72% to 35%, which Sebi also took note of.
Gensol Engineering shares have been in a freefall this year, losing nearly 83%. On Tuesday, the fell nearly 3% to Rs 129 in an upbeat market.
The market watchdog has temporarily barred the promoters from acting as directors or key managerial personnel, and prohibited Gensol and other entities from trading in the securities market until further notice.
The order follows a detailed probe that began after complaints of share price manipulation and default in loan repayments.
In a strongly worded order Sebi said, there is complete breakdown of internal controls and corporate governance norms in Gensol as a listed company. "The promoters were running a listed public company as if it were a propriety firm."
Sebi said Gensol had raised Rs 975 crore in loans from institutions like IREDA and PFC for buying electric vehicles. However, only a part of the money was actually used for that purpose.
The probe by the regulator showed that more than Rs 200 crore was routed through a car dealer and cycled back to promoter-linked entities. Some of it was used for unrelated personal expenses, including buying luxury real estate.
"The company’s funds were routed to related parties and used for unconnected expenses, as if the company’s funds were promoters’ piggybank. The diversions would mean they need to be written off from the company’s books, ultimately resulting in losses to the investors," Sebi said.
In addition, Sebi has also found that Gensol submitted forged documents to credit rating agencies to falsely claim timely debt repayments.
The diversion of funds of the company by promoter entities reflects a culture of weak internal control, according to the regulator, 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," the regulator said.
Sebi took note of the recent stock split of 1:10 announced by the company and acknowledged that this might attract more retail investors to the scrip. Hence, it issued an interim order to protect the interests of the investors and preserve market integrity.
The regulator also cautioned investors to be careful while investing their savings in the capital markets.
Gensol Engineering is engaged in the business of providing engineering, procurement and construction (EPC) services in the renewable energy sector, primarily focusing on solar power projects.
In addition to its core consulting and EPC business, the company has diversified into leasing electric vehicles and has positioned itself as a player in India’s growing clean mobility segment.
Its financials have grown impressively over the past few years. On a standalone basis, the sales have grown from Rs 61 crore in FY17 to Rs 1,152 crore in FY24. During the same period, operating profit went up from Rs 2 crore to Rs 209 crore and net profit from Rs 2 crore to Rs 80 crore.
Interestingly, from FY20-FY25, the promoter holding came down from 70.72% to 35%, which Sebi also took note of.
Gensol Engineering shares have been in a freefall this year, losing nearly 83%. On Tuesday, the fell nearly 3% to Rs 129 in an upbeat market.
You may also like
Thane Police Launch Digital Visitor Management System To Streamline Complaint Process
Secret to living longer could be hidden inside very easy brisk walking exercises
India Got Latent's Controversy: Maharashtra Cyber Records Joint Statement Of Ranveer Allahbadia, Samay Raina, Apoorva Mukhija, Ashish Chanchlani And Jaspreet Singh
Minecraft Movie on brink of box office history as Warner Bros bosses confirm sequel is coming 'imminently'
Pilgrims appeal to PM as 42k can't make it for Haj
