SEBI Chair Flags 'Egregious Behaviour' In Gensol Engineering Case
SEBI had barred Gensol Engineering's CEO Anmol Jaggi and Promoter-Director Puneet Jaggi form securities markets over siphoning off funds for personal use.
The Securities and Exchange Board of India's Chairman, Tuhin Kanta Pandey, said that the case of Gensol Engineering Ltd. underlines an example of “egregious behaviour” in the market that warrants closer scrutiny by all stakeholders involved in the IPO ecosystem.
The Gensol-like issues may happen if the supervisions are inadequate even if there were more regulations and stricter guardrails, Pandey told NDTV Profit in an interview.
The comments came amid broader regulatory scrutiny of the company. On April 15, the Securities and Exchange Board of India barred Gensol Engineering, CEO Anmol Singh Jaggi and Promoter-Director Puneet Singh Jaggi from accessing the securities market. SEBI also prohibited them from holding any key managerial roles, following findings that funds had been diverted in a loan-financed electric vehicle purchase scheme.
According to SEBI’s investigation, Gensol raised Rs 975 crore in loans to acquire 6,400 electric vehicles but purchased only 4,704 units for Rs 567.73 crore. The regulator found that more than Rs 200 crore remained unaccounted for, triggering concerns about fund misuse.
Credit rating agencies ICRA and Care Ratings downgraded Rs 2,050 crore of Gensol’s debt to default status in February. This included over Rs 1,640 crore in long-term borrowings and more than Rs 400 crore in short-term debt. The downgrades followed delays in loan servicing and concerns over alleged data falsification.
Thereafter, it was learnt by the credit rating agencies from IREDA and PFC that no such conduct letters were issued to Gensol by them.
Despite defaults beginning as early as December 2024, the company falsely assured rating agencies that it was regular in its payments.
Furthermore, Gensol has been asked to hold the stock split it announced, and the regulator has directed the appointment of a forensic auditor to examine its books of accounts and those of related parties.
Pandey mentioned that, "In the order, auditor appointment has been ordered. Nobody likes these behaviours, and they must be analysed to understand where the process failed.”
Pandey emphasised the role of merchant bankers and exchanges as the first line of defence in ensuring the integrity of public offerings.
“There is a lot of responsibility on merchant bankers. They should do a better job on due diligence. Exchanges too must be circumspect, as they are the ones facilitating IPO approvals under the SME platform scheme,” he said.
In the detailed order passed by Ashwani Bhatia, whole-time member at SEBI, the regulator noted that Gensol, a renewable energy and electric vehicle leasing company based in Ahmedabad, had witnessed an exponential rise in revenues and shareholding post its BSE SME listing in 2019 and migration to the mainboard in 2023. The regulator also mentioned that this can be seen on the online platform called Screener.in.
