In an interim order, the capital markets regulator has directed the solar power consultancy firm to put its recently announced stock split on hold
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Reuters
The Securities and Exchange Board of India (SEBI) has restrained Gensol Engineering and its promoters, Anmol Singh Jaggi and Puneet Singh Jaggi, from accessing capital markets for allegedly misappropriating loans, misleading disclosures, and fund diversion.
In an interim order on Tuesday, the capital markets regulator has directed the solar power consultancy firm to put its recently announced stock split on hold, and barred the two promoters from holding any directorial or key managerial positions in the company.
Further, a forensic auditor will be appointed by SEBI to examine Gensol and its related parties’ books of accounts. The report is to be submitted to the regulator within six months of such appointment, the order said.
SEBI’s probe, which followed complaints of share price manipulation and default in loan repayments, showed that Gensol Engineering had availed ₹977.75 crore in term loans from institutions like IREDA and PFC. Of this sum, ₹663.89 crore was earmarked for purchasing 6,400 electric vehicles (EVs). However, only 4,704 vehicles worth ₹567.73 crore were procured, with ₹262.13 crore unaccounted for.
Fund diversion
Pointing out a complete breakdown of internal controls and corporate governance norms in Gensol as a listed company, SEBI whole-time member Ashwani Bhatia said, “The promoters were running a listed public company as if it were a proprietary 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 probe by the regulator showed that more than ₹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 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,” said Bhatia in a 29-page interim order.
In addition, SEBI also found that Gensol submitted forged documents to credit rating agencies to falsely claim timely debt repayments.
Published on April 15, 2025