SEBI placed temporary limits on Gensol Engineering Ltd promoters to prevent their access to capital markets operations and obligations for director positions on listed boards. As part of its requirements, SEBI conducted a forensic audit that stopped the stock split and launched extra company examinations.
The SEBI launched its investigation in June 2024 following an accusation that the organisation was manipulating share price inflation and using improper money transfer methods. SEBI investigators identified critical governance deficiencies and major structural control breakdowns that affected Gensol.
According to the order criteria, the company performed unauthorised fund transfers to the personal bank accounts of employees and linked organisations through unapproved processes.
The main problem discovered by the investigation involved the incorrect spending of loan funds despite an insufficient risk assessment. Gensol received financial backing of ₹977.75 crore from the Indian Renewable Energy Development Agency (IREDA) and Power Finance Corporation (PFC) for electric vehicle (EV) purchases totalling ₹663.89 crore out of this amount.
Gensol purchased 4,704 electric cars from the 6,400 units, which they borrowed funds to buy through the Indian Renewable Energy Development Agency (IREDA) and Power Finance Corporation (PFC).
According to SEBI, the founders and Promoter-directors of Genso, Anmol Singh Jaggi and Puneet Singh Jaggi, diverted corporate funding to personal spending and delegated company resources to businesses owned by themselves. Records revealed that Gensol operators bought a golf set for ₹26 lakhs after spending ₹42.94 crore to purchase a Gurugram apartment through linked business entities.
Anmol Singh Jaggi used ₹25.76 crore of the company's money for its purposes and made payments that did not belong to the corporation. He owned 200 shares of a tech startup and had invested his ₹50 lakh capital in this startup by March 31, 2024. Investigators discovered improper utilisation of ring-fenced structure borrowings during their investigation. Jaggi received 37.5 crore rupees from 171.30 crore rupees EV leasing facility in his personal bank account.
Gensol's credit facilities were downgraded due to rating agencies CARE Ratings and ICRA applying default ratings. Debt servicing payment delays led to the company deploying doubtful financial documents. Gensol failed to make timely repayments because IREDA and PFC denied creating the conduct letters that the company presented.
SEBI noted that the company promoters could not reveal related-party business transactions necessary for listing regulations. SEBI expressed doubts about investor exposure risk to Gensol after a stock split because it might invite additional retail investors to participate in the company under investigation.