Gensol Engineering crisis: How promoters bought DLF Camellias home in Gurugram

Market regulator Securities and Exchanges Board of India (SEBI) in its interim order has barred Gensol Engineering Ltd (GEL) and two of its promoters, Anmol Singh Jaggi and Puneet Singh Jaggi, from the securities markets till further orders in a fund diversion and governance lapses case.

The securities market regulator also prohibited the two from holding a directorial or key management personnel position in the engineering firm until further notice.

SEBI has also ordered Gensol Engineering to put a hold on the 10:1 stock split its board had approved on Saturday, April 12.

In June 2024, the market watchdog received a complaint related to the manipulation of share price and diversion of funds from GEL and thereafter started examining the matter.

Following SEBI's interim order shares of Gensol Engineering were locked in 5% lower circuit at ₹123.65 on the BSE. The stock has so far this year dropped 84% from ₹758.40 it touched on December 31, data from BSE showed.

At the centre of the controversy is the purchase of a luxury residence at The Camellias, DLF's luxury housing project in Gurugram, allegedly funded through a complex web of financial transactions.

According to SEBI’s interim order, the promoters allegedly used company funds, routed through multiple entities, to acquire the apartment in DLF Camellias. The order traces ₹70 crore received by Capbridge Ventures LLP, a promoter-linked entity, in FY23.

₹50 crore was transferred on October 3, 2022, from Go-Auto, another entity connected to Gensol.

₹20 crore followed on December 31, 2022, appearing it to be siphoned off from loan proceeds Gensol had secured from IREDA (Indian Renewable Energy Development Agency).

These funds were then partly utilised to purchase the luxury property.

The money trail outlined in SEBI’s order reflects an elaborate financial round-tripping mechanism.

The IREDA loan of ₹71.41 crore was first disbursed to Gensol's trust account.

On the same day, ₹54.62 crore was transferred to Go-Auto.

Go-Auto, in turn, sent ₹40 crore to Wellray, which then redistributed funds to multiple entities including Matrix, Prescinto and even Gensol itself.

In another case, Blu-Smart Mobility, another promoter-affiliated firm, had invested ₹50 crore as fixed deposit with Bandhan Bank, which served as collateral for an overdraft facility to Param Care Pvt. Ltd. — another related party company. Param Care used these funds to repay ₹47.5 crore to Go-Auto, further demonstrating circular movement of money.

The market regulator found at least ₹8.5 crore was funnelled through Go-Auto, Gensol, and Wellray four times within two days in November 2023, indicating possible attempts to disguise the origin and use of funds.

SEBI also flagged diversion of ₹96.69 crore from a loan Gensol received from the Power Finance Corporation (PFC) in September 2023. These funds, intended for construction activities and were allegedly rerouted through Go-Auto to Gensol Consultant and Capbridge Ventures LLP.

Capbridge further transferred ₹40 crore to Gensol Ventures Pvt. Ltd., an entity carrying a prior debit balance of ₹38.12 crore, showing that diverted funds were being used to cover earlier liabilities.

SEBI’s findings also touch upon suspected manipulation of Gensol’s stock price. Wellray, after receiving funds via Go-Auto, transferred ₹50 lakh to a Sharekhan account and used it to trade in Gensol’s shares — a possible breach of securities trading norms.