CaseStudy - Gensol Engineering Ltd

Gensol Engineering Ltd
  • CaseStudy
  • April 16, 2025
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Gensol Engineering Ltd

CaseStudy – Gensol Engineering Ltd

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Case Study - Gensol Engineering Ltd

SEBI Takes Action Against Gensol Promoters
In a recent interim order, SEBI has taken strong action against the promoters of Gensol Engineering Limited, Anmol Singh Jaggi and Puneet Singh Jaggi:
1.    Restrained from holding any position as Director or Key Managerial Personnel (KMP) in Gensol.
2.    Barred from buying, selling, or dealing in securities until further notice.
These actions follow a series of developments that raised significant concerns regarding corporate governance, financial integrity, and promoter conduct.
Key Red Flags Identified
Promoter Activity
•    Between June 2022 and December 2024, promoter shareholding decreased from 71.3% to 62.7%.
•    During the same period, the proportion of pledged shares rose sharply from 27.4% to 62.7%, indicating increasing financial pressure. 
Financials Show Rapid Growth
•    From FY21 to FY24, Gensol’s consolidated sales grew 15 times, while EBITDA increased 37 times.
•    This led to a 59x rise in the share price between March 2021 and June 2024.

However, this extraordinary growth masked deeper issues related to leverage and governance.
Debt Surge and Credit Rating Downgrade
•    Total debt increased 132 times from March 2021 to March 2024.
•    The debt-to-equity ratio rose from 0.29 to 4.29, rendering the company highly leveraged.

This prompted ICRA to downgrade Gensol’s credit rating from BBB to D, which is typically reserved for junk-grade debt. ICRA also flagged concerns over potential falsification of loan repayment documents submitted by the company.

As a result, Gensol’s share price declined by nearly 90% over the following weeks.

Continued Promoter Selling
Despite issuing positive public statements, the promoters sold 11.15 lakh shares in the open market during February and March 2025, further eroding investor confidence.
 Pasted Image
(Source: Screener.in)

Previous Legal Trouble

The promoters had previously come under investigation in connection with the Mahadev Betting Scam involving Harish Tibrewal. The Enforcement Directorate had frozen their shares during the course of the investigation.
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(Source: Screener.in) 

SEBI Uncovers Misuse of EV Funds

SEBI’s interim order has outlined how funds, originally intended for electric vehicle procurement, were diverted toward the purchase of a luxury apartment in DLF’s Camellias project.
Timeline of Transactions:
•    September 29, 2022:
Jasminder Kaur, mother of the promoters, paid ₹5 crore to DLF as an apartment booking advance. SEBI found this amount originated from Gensol.
•    September 30, 2022:
Gensol received ₹71.39 crore from IREDA (a government institution) as an EV loan and infused ₹26.06 crore of promoter contribution into its Trust and Retention Account, totaling ₹97.46 crore.
•    October 3, 2022:
₹93.88 crore was transferred by Gensol to Go-Auto Pvt Ltd, a related entity.
Go-Auto then transferred ₹50 crore to Capbridge Ventures LLP, where the promoters are partners.
•    October 6, 2022:
Capbridge Ventures LLP paid ₹42.94 crore to DLF as the main payment for the apartment.
•    October 20, 2022:
The apartment was formally allotted to Jasminder Kaur.
•    Subsequently:
The property allotment was transferred to Capbridge Ventures LLP.
•    November 21, 2022:
DLF refunded the initial ₹5 crore advance to Jasminder Kaur.
Instead of being returned to Gensol, it was diverted to another related party, Matrix Gas and Renewables Ltd.

SEBI’s Findings and Conclusion

SEBI concluded the following:
•    Funds meant for business expansion were diverted through a series of related-party transactions to finance a luxury apartment for personal benefit.
•    The structure of the transactions was designed to conceal the actual purpose of fund deployment.
•    These actions reflect severe lapses in corporate governance and misuse of public and institutional funds.

Investors are reminded to look beyond surface-level growth metrics and closely monitor promoter conduct, leverage levels, and regulatory disclosures. These elements often reveal the true financial health and intent behind corporate actions.

(Source: Ace Equity, Screener.in, SEBI)

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