Gensol Engineering is now at the centre of a financial and governance storm. The company’s share price has been locked in the lower circuit for seventh consecutive trading sessions. The trigger continues to be the SEBI probe barring promoters, its implications, stock split on hold, growing debt troubles, spree of resignations and questions about the very foundation of the company’s operations.
Gensol Engineering: Move from being the green energy darling to a scam hub
Gensol Engineering made an entry through an SME IPO, back in 2019. With a rising order book, increasing revenues, and big plans, Gensol Engineering later made its journey to the NSE and BSE mainboards.
But fast forward to now, investors are watching as the stock keeps crashing, locked in lower circuits day after day.
SEBI steps in: Manufacturing or mirage?
The turning point came when the markets regulator SEBI dropped an interim order on April 15, disclosing startling findings.
As per reports, a complaint filed in June 2024 accused Gensol Engineering and its promoters of manipulating share prices and misusing funds. Following this, SEBI launched a probe and what it found is reflected in the stock performance of the company.
According to SEBI, there was “no manufacturing activity” at Gensol Engineering’s EV facility in Pune. An official from the NSE visited the Chakan site on April 9, and found only 2-3 workers on-site. Electricity bills showed the lack of operations. The highest monthly bill over the past year was just Rs 1.57 lakh, way below what one would expect from an operational manufacturing unit, added reports.
Furthermore, adding to the fiasco, Gensol Engineering had earlier claimed to have received pre-orders for 30,000 EVs, announced right after the Bharat Mobility Global Expo in January. But SEBI clarified these were just MoUs with nine parties with no pricing, no delivery timelines, and possibly, no real intention to fulfil them.
The Rs 977 crore loan question
As per media reports, Gensol Engineering secured loans worth Rs 977.75 crore from IREDA and PFC between FY22 and FY24. Out of this, Rs 663.89 crore was earmarked to purchase 6,400 EVs. But the company bought only 4,704 vehicles, worth Rs 567.73 crore, according to their supplier Go-Auto. That leaves nearly Rs 262 crore unaccounted for.
SEBI believes some of this money was redirected to related entities linked to the promoter brothers – Anmol and Puneet Singh Jaggi – and even used for personal purchases like a luxury apartment and private investments.
Promoters barred, stock split paused
In response, SEBI has taken strict action. Both Jaggi brothers have been banned from accessing the securities market, and barred from holding any director-level positions in Gensol Engineering. The company’s proposed 1:10 stock split has also been halted.
Following the regulatory order, both Anmol and Puneet have resigned from the board.
82% promoter shares pledged
As per reports, 82% of Gensol Engineering’s promoter shares are pledged, up from 80% in September 2024. This means the company’s founders have borrowed heavily against their own stock. When a company’s share price starts tanking, this becomes dangerous, lenders may sell off pledged shares, which drags the stock down even more.
The Gensol Engineering perspective
In a desperate attempt to calm nerves, Gensol Engineering has issued a clarification. It claims the problem is due to cash flow mismatch in big projects – not misreporting. An independent committee has been set up to investigate.
The company also says it has repaid Rs 230 crore this year, and plans to reduce debt by Rs 665 crore by selling assets. It highlighted a Rs 7,000 crore order book, and shared strong FY25 numbers, revenue up 42%, operating profit up 89%, and net profit up 34%.
Gensol Engineering stock performance
Gensol Engineering is now facing a brutal reckoning on the bourses. The share price of Gensol Engineering has plunged a staggering 88% over the past year, wiping out most of its market value. The free fall has not slowed, it is down over 16% in just the past five days, 53% in the past month, and a massive 86% in the last six months. Gensol Engineering is down nearly 86% year-to-date (YTD).