SEBI Pulls the Plug: Gensol Engineering’s Promoters Barred, Stock Split Stalled Amid Fund Diversion Probe

Updated: April 15, 2025 20:50

Image Source: The Economic Times

Important Developments

SEBI has passed a blanket interim order against Gensol Engineering Ltd and its promoters, Anmol Singh Jaggi and Puneet Singh Jaggi, after SEBI received complaints of huge fund diversion and corporate governance lapses.
Both Puneet Singh Jaggi and Anmol are now prohibited from serving in any directorial or key managerial capacity in Gensol Engineering or any of its related companies.
SEBI has also prohibited Gensol Engineering, along with the Jaggi brothers, from purchasing, selling, or trading in securities until further notice.
The recently announced 1:10 stock split of the company has been suspended by SEBI on grounds that the corporate action is not in the interests of shareholders.
SEBI has directed a forensic audit of the books of Gensol Engineering and related parties, and a report has to be filed within six months from the appointment of the auditor.

Background and Findings

The crackdown follows a detailed SEBI investigation triggered by complaints of share price manipulation, loan defaults, and alleged submission of fake loan servicing documents.
SEBI’s interim order highlights that Gensol Engineering raised approximately ₹975 crore in loans, ostensibly for the purchase of electric vehicles (EVs). However, a significant portion of these funds was allegedly diverted to promoter-linked entities and used for unrelated personal expenses, including luxury real estate purchases.
The probe revealed that a small percentage of the money was utilized for the purpose it was meant for, with more than ₹200 crore being channeled through a car dealer and recycled back to the promoters.
SEBI termed a "complete breakdown of internal controls and corporate governance norms," saying that the promoters treated the listed company like a personal proprietorship.
Gensol's assertions of having won big EV orders were also reported to be grounded on non-binding MoUs without essential commercial terms, and a visit to the site found no production activity at the company factory.

Market Impact

Gensol Engineering shares fell 5% on Tuesday, a new 52-week low, and have fallen more than 83% in value so far in 2025.
Both NSE and BSE have put Gensol in the Enhanced Surveillance Measure (ESM) regime to safeguard investors.
The financial woes of the company are also highlighted by the recent downgrading of credit ratings, with some of the facilities now graded as 'default'.

Next Steps

The restrictions on the promoters and Gensol Engineering will continue until there is a final order from SEBI.
The forensic audit will throw more light on the amount of diversion of funds and loss of investors.

Sources: Moneycontrol, Business Today, CNBC-TV18, Economic Times