Sebi Ban: Gensol’s Jaggi Brothers Barred for Fund Misuse

Aakhir Tak – In Shorts

Sebi Ban imposed on Gensol Engineering promoters, Anmol Singh Jaggi and Puneet Singh Jaggi.
Allegations include significant fund diversion of company money for personal use.
The Jaggi Brothers are barred from securities market and key management positions.
Misuse of loans from IREDA and PFC meant for EVs is a key finding.
Concerns raised over fake documents, weak controls, and falling promoter stake.

Aakhir Tak – In Depth

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Sebi Takes Strict Action Against Gensol Engineering Promoters

The Securities and Exchange Board of India (Sebi) has put Gensol Engineering and its promoters under scrutiny. This action stems from alleged fund diversion and poor financial practices within the company. The market regulator issued an interim order imposing a Sebi Ban on promoters Anmol Singh Jaggi and Puneet Singh Jaggi. They are barred from participating in the securities market. Furthermore, they cannot hold any position as directors or key managerial personnel (KMP) in any listed company.

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Allegations of Fund Diversion and Personal Use

Sebi initiated this action after investigating complaints. These complaints related to share price manipulation and loan defaults involving Gensol. The investigation revealed misuse of company funds. It also found inadequate financial controls. “The promoters were running a listed public company as if it were a propriety firm,” Sebi stated pointedly in its order.

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The regulator elaborated, “The prima facie findings have shown mis-utilisation and diversion of funds of the Company in a fraudulent manner by its promoter directors, Anmol Singh Jaggi and Puneet Singh Jaggi, who are also the direct beneficiaries of the diverted funds.” These are serious allegations against the Jaggi Brothers.

Loan Misuse and Fake Documentation

Sebi found that the company secured loans totaling ₹975 crore. These loans came from institutions like the Indian Renewable Energy Development Agency (IREDA) and Power Finance Corporation (PFC). The stated purpose was purchasing electric vehicles. However, investigation showed only a portion of this loan amount was used for buying EVs.

Over ₹200 crore was allegedly routed through a car dealership. This money was subsequently transferred to entities linked to the promoters. Reports suggest some of this diverted money funded personal purchases, including expensive properties. Sebi commented that the promoters treated company funds like their “own piggy bank.” Money was diverted to related parties. It was used for purposes unrelated to Gensol’s business. Such fund diversion might eventually require write-offs from the company’s books. This could potentially lead to significant shareholder loss.

Additionally, Sebi discovered that Gensol submitted fake documents to credit rating agencies. These documents falsely indicated timely loan repayments when defaults were occurring. The regulator noted that even loans supposed to be ring-fenced—restricted for specific business use—were redirected according to the promoters’ wishes. This reflects extremely weak internal systems at Gensol Engineering. The misuse of funds from IREDA and PFC is a major part of the investigation.

Stock Split and Ownership Concerns

Sebi also highlighted the company’s recent announcement of a 1:10 stock split. The regulator expressed concern that such a move could attract more retail investors. Given the company’s ongoing issues, this could pose risks to these investors. To prevent further damage to investor interests and maintain market integrity, Sebi issued this interim Promoter Ban order.

Company Overview and Financials

Gensol Engineering operates within the renewable energy sector. Its primary involvement is in solar EPC (engineering, procurement, and construction) projects. Over time, the company expanded into the electric vehicle leasing market.

The company has shown strong financial growth in recent years. Its revenue surged from ₹61 crore in FY17 to ₹1,152 crore in FY24. During the same period, operating profit climbed from ₹2 crore to ₹209 crore. Net profit also grew significantly, from ₹2 crore to ₹80 crore.

However, Sebi also noted a sharp decline in promoter shareholding. It dropped from 70.72% in FY20 to just 35% in FY25. This significant change in ownership structure was flagged as a concern during the investigation. Gensol Engineering’s stock has experienced a major decline this year. Year-to-date, it has lost approximately 83% of its value. The Sebi Ban could exert further downward pressure on the stock.

Aakhir Tak – Key Takeaways to Remember

Sebi Ban: Gensol Engineering promoters, the Jaggi Brothers, face restrictions.
Core Allegation: Misuse and fund diversion of company money for personal benefit.
Misappropriation of IREDA/PFC loans and submission of fake documents are key issues.
Weak internal controls and a sharp drop in promoter shareholding raise red flags.
Sebi’s interim order aims to protect investors from potential shareholder loss.