Gensol Engineering, a company in the renewable energy sector, has seen its share price drop significantly. On Thursday, it fell by nearly 5%, closing at Rs 117.50. This drop came after the company was placed under strict trading rules by stock exchanges. The stock exchanges have imposed a limit on how much the share price can move and are now requiring that all trades be settled the same day. This follows a recent action by the market regulator, SEBI.
SEBI found that the promoters of Gensol, Anmol and Puneet Singh Jaggi, used Rs 262 crore—money that was loaned to the company for buying electric vehicles—to fund personal expenses and invest in other businesses. The loan was initially meant to buy 1,700 electric cars for their EV cab service, BluSmart.
As a result of the findings, Gensol’s stock has lost a lot of value over the past month, dropping by more than 50%. In the past year, its share price has fallen by over 87%.
In response to the SEBI investigation, Gensol announced that an independent director, Arun Menon, has resigned. Menon had tried to raise concerns about the company’s high debt and lack of transparency regarding its financial situation. He had also asked for meetings to discuss how the company could reduce its debt, but his requests were not answered.
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The company has clarified that there is no other hidden information affecting the stock price besides what SEBI has already flagged. It also denied rumors about a possible merger or sale.
What SEBI Found
SEBI’s investigation revealed that out of the loan meant for electric vehicles, Rs 262 crore was used for luxury items, including an apartment in a high-end society in Gurugram, Haryana. Some money was also transferred to related businesses and to the Jaggi brothers through complex transactions. Anmol Jaggi spent money on luxury items like a golf set, and even invested in a new venture by Ashneer Grover, the former founder of BharatPe.
Due to these actions, SEBI has banned the Jaggi brothers from participating in the securities market, and they are no longer involved in managing Gensol.
Vijay Kedia’s Warning
Investor Vijay Kedia shared a message on social media warning people to be cautious of companies like Gensol. He highlighted red flags such as companies using buzzwords like “AI-powered” to attract investors, promoting lifestyles that don’t match their company’s performance, and doing too many transactions with related businesses.
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Plans for BluSmart
In another development, Gensol is considering shutting down its electric vehicle service, BluSmart, and transitioning back to being a fleet operator for Uber. This plan, which has been approved by Gensol’s shareholders, is expected to start with 700-800 cabs. BluSmart had seen significant growth in the past, with 25,000-30,000 rides per day, but this number has halved recently.
This marks a challenging time for Gensol, as it deals with financial struggles and questions about its management.
