SEBI Bans Gensol Engg, Promoters from Securities Market

The Securities and Exchange Board of India (SEBI) imposed a ban on Gensol Engineering and its promoters, Anmol Singh Jaggi and Puneet Singh Jaggi, preventing them from participating in the securities markets until further notice. This action is part of an investigation into allegations of fund diversion and governance issues.

Additionally, SEBI has prohibited Anmol and Puneet Singh Jaggi from serving as directors or in key managerial roles at Gensol until further orders are issued. The regulator has also instructed Gensol Engineering Ltd (GEL) to suspend its announced stock split.

The decision follows a complaint received by SEBI in June 2024, which raised concerns about share price manipulation and the misappropriation of funds from GEL. In a detailed 29-page interim order, SEBI indicated that preliminary findings suggest that the promoter directors, Anmol and Puneet Singh Jaggi, engaged in fraudulent activities involving the misuse and diversion of company funds.

SEBI accused the company of attempting to mislead the regulator, credit rating agencies, lenders, and investors by submitting forged letters from its lenders. The regulator stated that the actions of the promoters violated the Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) regulations.

The investigation revealed that the promoters were managing the publicly listed company as if it were a private entity, diverting GEL’s funds to related parties and using them for unrelated expenses, effectively treating the company’s finances as their own. Such transactions could lead to significant losses for the company’s investors.

SEBI’s whole-time member, Ashwani Bhatia, noted that there is clear evidence of serious breaches of corporate governance within the company. The diversion of funds indicates a lack of robust internal controls, allowing the promoters to reroute borrowings from institutional creditors at their discretion. The internal controls at Gensol appear to be inadequate, facilitating the flow of funds to various related entities and individuals through complex transactions.

Furthermore, SEBI has mandated that Gensol appoint a forensic auditor to review its financial records and those of its related parties.