In a significant regulatory move, the Securities and Exchange Board of India (SEBI) has issued an interim order against Gensol Engineering and its promoters, Puneet Singh Jaggi and Anmol Singh Jaggi, barring them from the securities markets due to serious allegations of fund diversion and governance failures. This order, which comes in the wake of a detailed investigation initiated after a complaint was lodged in June 2024, has raised concerns among investors and has led to a dramatic decline in the company's stock price.
SEBI’s investigation revealed prima facie evidence of misutilization and diversion of company funds by the Jaggi brothers, who allegedly treated the publicly listed Gensol Engineering as a proprietary firm. The regulator found that the company had availed loans amounting to ₹978 crore from institutions such as the Indian Renewable Energy Development Agency (IREDA) and Power Finance Corporation (PFC), with a portion of these funds reportedly used for personal expenses, including the purchase of luxury real estate.
According to SEBI, the promoters misled regulators, credit rating agencies (CRAs), lenders, and investors by providing fraudulent letters of conduct allegedly issued by its lenders. "The promoters were running a listed public company as if it were a proprietary firm," SEBI stated in its order. This mismanagement has raised alarm bells regarding the internal controls and corporate governance practices in place at Gensol Engineering.
In light of these findings, SEBI has also mandated that Gensol Engineering suspend its recently announced stock split, which was intended to attract more retail investors. The stock price of Gensol Engineering has plummeted nearly 90% from its all-time high of ₹1,147 to approximately ₹129, reflecting the fallout from these allegations. As of April 16, 2025, Gensol's shares hit a lower circuit of ₹123.65 on the Bombay Stock Exchange (BSE), marking a 5% decline.
Gensol Engineering's market capitalization has dropped to approximately ₹469.90 crore, with the stock now classified under the 'T' group of shares. This classification imposes stricter trading norms, including mandatory delivery and a 5% circuit limit, thereby restricting intraday trading activities. The company’s stock has suffered a staggering 83% decline this year alone, as investors grapple with the implications of the ongoing investigation and the recent downgrades by credit rating agencies.
The downgrades by ICRA and CARE Ratings have further exacerbated the situation, with the latter classifying Gensol as a default due to delays in servicing its debt obligations. ICRA highlighted issues over corporate governance practices, pointing to seemingly falsified debt servicing histories. These downgrades have not only affected Gensol’s credibility in the market but have also led to a significant erosion of investor confidence.
As of December 2024, Gensol Engineering had close to one lakh retail shareholders, many of whom have seen their investments dramatically decrease in value. The company's retail shareholding rose to 23.44% from 13.94% over the past year, indicating a growing base of individual investors who are now facing substantial losses.
In a recent interaction, Anmol Singh Jaggi, the chairman and managing director of Gensol, denied any allegations of wrongdoing, asserting that the promoters remain fully committed to the business. However, the evidence presented by SEBI suggests a troubling pattern of fund misappropriation, with more than ₹200 crore allegedly routed through a car dealer back to promoter-linked entities.
SEBI's interim order restricts both Anmol and Puneet Singh Jaggi from holding any director or key managerial roles at Gensol Engineering. The regulator has also announced plans to appoint a forensic auditor to scrutinize the company’s accounts and those of its related parties, with a report expected within six months.
As Gensol Engineering navigates this turbulent period, the implications for its nearly one lakh retail shareholders remain uncertain. With the stock under the Enhanced Surveillance Measure (ESM) framework, which is applied to companies with market capitalizations below ₹1,000 crore, investors are advised to exercise caution. This framework aims to protect investors and ensure market integrity amidst growing concerns over Gensol's financial health.
The situation at Gensol Engineering serves as a stark reminder of the importance of corporate governance and the potential repercussions of mismanagement in publicly traded companies. As investigations continue and the market reacts to these developments, shareholders and investors alike are left to ponder the future of Gensol Engineering and the broader implications for regulatory compliance in India’s burgeoning corporate landscape.
