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Informist, Tuesday, Apr. 15, 2025

NEW DELHI – The Securities and Exchange Board of India is probing Gensol Engineering Ltd. and its promoters for diverting loans taken from Power Finance Corp. Ltd. and Indian Renewable Energy Development Agency Ltd. The markets regulator Tuesday issued an interim order against the company and two promoters and directors, Anmol Singh Jaggi and Puneet Singh Jaggi, barring them from any securities market related activity, and prohibiting Anmol Jaggi and Puneet Jaggi from holding the post of director or any key managerial position in the company, till further orders.

The SEBI said it has prima facie found that loan of INR 967 million from PFC taken by Gensol "was diverted to promoter and promoter-linked entities, bypassing the stated end-use of the PFC loan." The markets regulator also found that INR 375 million out of a total loan of INR 1.71 billion taken by Gensol's subsidiary, Gensol EV Lease, from IREDA was transferred to Anmol Jaggi. "This aspect needs further examination," SEBI said in the interim order.

The market regulator said the fund diversion primarily occurred in the context of electric vehicle purchases intended for leasing to a related party. "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," SEBI said in the interim order.

SEBI said it had "started examining the matter" after it received a complaint in June 2024, relating to price manipulation in the shares of Gensol, and diversion of funds from the company. In March, credit rating agencies ICRA and CARE Rating downgraded Gensol's ratings to default for delays in servicing debt obligation.

ICRA had issued a statement claiming that certain documents shared by Gensol with the rating company on its debt servicing track record "were apparently falsified" which raised doubts about the company's liquidity position and corporate governance practices. Gensol had provided, to the rating companies, conduct letters purportedly issued by PFC and IREDA which stated that the company was regular in its debt servicing.

Gensol had also issued a stock exchange filing denying the allegation by ICRA. But when the rating companies sought confirmation from IREDA and PFC about the issuance of conduct letters, the two lenders denied having issued such letters.

Following these events, SEBI called for more information from the rating companies, and also called for detailed information from IREDA and PFC regarding the debt servicing status of loans sanctioned to Gensol along with the loan sanction letters and account statements. "On reviewing the information submitted by the aforesaid lenders, multiple instances of default by the Company in servicing their loans were observed," SEBI said in its interim order Tuesday.

SEBI said it will appoint a forensic auditor to inspect the accounts of Gensol and its related parties. The final order will be passed after the probe is completed.

On Tuesday, shares of Gensol ended down 2.7% at INR 129.14 on the National Stock Exchange.  End

Reported by Rajesh Gajra

Edited by Ashish Shirke

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