Gensol Engineering funds diversion: SEBI halts stock split, CEO Anmol Jaggi’s lavish lifestyle — Timeline of events | Company Business News-OxBig News Network

Gensol Engineering funds diversion: The Securities and Exchange Board of India (SEBI) on April 15 barred Gensol Engineering founder-promoters Anmol Singh Jaggi and brother Puneet Jaggi from the securities markets till further orders in relation to a funds diversion case.

Further, the two brothers have also been banned from holding key executive posts (including as director or in the management) in Gensol Engineering. The capital markets watchdog is probing the company and the Jaggis in relation to a fund diversion and governance lapses case.

Besides the action against Anmol Singh Jaggi and Puneet Singh Jaggi, Gensol Engineering’s shares took a hit after SEBI put the company’s planned stock split on hold, the regulator’s 29-page interim order document showed.

In June 2024, SEBI recieved a complaint alleging manipulation of share price and diversion of funds from Gensol Engineering (aka GEL) towards personal expenses of CEO Anmol Singh Jaggi and his brother Puneet.

Gensol was founded in 2012 by the Jaggis. The SEBI probe showed that in 2022, Gensol Engineering took a loan of ₹71.41 crore from IREDA and transferred ₹26 crore from its own account. These funds, worth ₹97 crore, were later transferred to Go-Auto, a car dealership firm related to the company. Go-Auto sent ₹50 crore to Capbridge Ventures, a firm controlled by Anmol Singh Jaggi.

“Bank statements of Capbridge Ventures LLP further showed that it received ₹70 crore in FY 2023 from Go-Auto: ₹50 crore on October 03, 2022, which was partly utilized for acquiring the apartment in ‘The Camellias,’ DLF,” Sebi’s interim order said.

Other lavish spendings include:

• ₹26 lakh were paid to TaylorMade for a golf set.
• ₹3 lakh to MakeMyTrip for personal travel.
• ₹9.95 lakh to ICICI Bank credit card for personal usage.
• ₹17.28 lakh to Titan Company.
• ₹10.36 lakh were paid to Kamco Chew Food Pvt Ltd Spa.
• ₹8 lakh to Mayo Design.
• ₹23 lakh were paid to ICICI Securities for personal purposes.

What SEBI Said In Interim Order over Gensol Engineering, Directors:

As per the SEBI interim order: “The prima facie findings have shown mis-utilisation and diversion of funds of the company (GEL) 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.”

“The company has attempted to mislead Sebi, the CRAs (credit rating agencies), the lenders and the investors by submitting forged conduct letters purportedly issued by its lenders,” the regulator said.

The order added that GEL, Anmol and Puneet Jaggi have allegedly violated provisions under the Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) rules.

SEBI blasted the Jaggis for “running a listed public company as if it were a propriety firm” and noted that GEL’s funds seemed to have been routed towards unconnected expenses “as if the company’s funds were promoters’ piggy banks”.

The result of these transactions would mean that the diversions at some time need to be written off from Gensol’s books, ultimately resulting in losses to the investors of the company.

Gensol Share Price Down: Will SEBI Order Protect Retail Investors?

As the wide-ranging financial misappropriations to light, Gensol Engineering shares, which were already in a freefall over the last 1.5 months amid allegations of mismanagement, misappropriation of funds and credit rating downgrades, shed another 5 per cent today, April 16.

The scrip has lost almost 80 per cent of its value during this period, with Gensol Engineering stock trapped in the lower circuit on most trading days in March and April. Slumping from its all-time high of ₹1,126 per share touched in June 2024, investors are now poorer by ₹3,830 crore.

This is where SEBI’s action of halting the stock split comes in to protect retail investors. SEBI put the proposed 1:10 stock split plan on hold saying it may not be in the interest of the investors at this stage. The regulator highlighted that a sharp fall in promoter holding with the risk of further reduction, could trap “gullible investors”.

Speaking to Livemint, Kranthi Bathini of Wealthmills Securities said that such small-cap and mid-cap stocks “come with these kinds of execution and corporate governance risks”, and added that retail investors can exit Gensol Engineer shares, if they get an opportunity.

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