Gensol Engineering share price hits 5% lower circuit as corporate governance crisis deepens; check details, timeline of events

The stock was locked at ₹122.68 on the NSE, down 5%.

SEBI has also debarred Anmol and Puneet Singh Jaggi from holding the position of a director or key managerial personnel in Gensol until further orders.

Further, the market watchdog directed Gensol Engineering to put on hold the stock split announced by it.

In a 29-page interim order, the market regulator said, "The prima facie findings have shown misutilisation and diversion of funds of the company (GEL) in a fraudulent manner by its promoter directors, Anmol Singh Jaggi and Puneet Singh Jaggi, who are also the direct beneficiaries of the diverted funds."

"The company has attempted to mislead SEBI, the CRAs (credit rating agencies), the lenders and the investors by submitting forged conduct letters purportedly issued by its lenders," the regulator said.

The noticees 1, 2 and 3 (GEL, Anmol and Puneet Singh Jaggi) are alleged to have violated the provisions of PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) rules, it added.

SEBI noted that the promoters were running a listed public company as if it were a proprietary firm. GEL's funds were routed to related parties and used for unconnected expenses as if the company's funds were promoters' piggy banks.

The result of these transactions would mean that the diversions at some time need to be written off from Gensol's books, ultimately resulting in losses to the investors of the company.

"...prima facie evidence of a blatant violation of rules of corporate governance is writ large over the workings of the company. The diversion of funds of the company (GEL) by promoter entities reflects a culture of weak internal control, where even ring-fenced borrowings from institutional creditors were rerouted at the total discretion of the promoters," SEBI's whole-time member Ashwani Bhatia said in the order.

The internal controls at Gensol appear to be loose, and through the quick layering of transactions, funds have seamlessly flowed to multiple related entities/individuals, Bhatia said.

It also directed the firm to appoint a forensic auditor to examine the books of accounts of Gensol and its related parties.

Gensol Engineering share price fall

Shares of Gensol Engineering have been in a free fall ever since rating agencies CARE and ICRA downgraded the company's credit ratings last month. BSE data show that the stock price has fallen 50.27% in the past 30 days, as against around a 4% rally in the benchmark S&P BSE SENSEX.

The BSE Industrials index has gained 6.18% during the window.

On March 4, 2025, CARE Ratings downgraded the company to default from the previous “BB+”.

Further, it downgraded Gensol’s long-term bank facilities worth ₹639.7 crore to “CARE D” from the previous “CARE BB+” with a stable outlook. Furthermore, it also revised its ratings lower for other long-term/short-term bank facilities from “CARE BB+” with a stable “CARE A4+” outlook to “CARE D”.

As per CARE, issuers with a CARE D rating are in default or are expected to default soon. Additionally, a BB+ rating means an issuer has a moderate risk of defaulting on its debt obligations.

On March 5, ICRA Ratings downgraded the bank facilities of Gensol Engineering Limited (GEL) to [ICRA]D following feedback received by ICRA from the company’s lenders about the ongoing delays in debt servicing.

ICRA notes that Gensol Engineering has delayed in its debt servicing obligations as per feedback received from the lenders.

"GEL, in its latest public disclosures as well as in its recent communications with ICRA, had highlighted sizeable available liquidity to support its operations during its ongoing growth phase. GEL had also been sharing no-default statements with ICRA at the beginning of every month, suggesting timely debt servicing. However, ICRA has now learnt that certain documents shared by GEL with ICRA on its debt servicing track record were apparently falsified, which raises concerns about its corporate governance practices, including its liquidity position," ICRA said.

Further, delays in debt servicing by more than 15 days to the bondholders of Blusmart in February 2025 point to lapses in liquidity management within the group, ICRA added.

Fundraising and stock split

Following these developments, the company's board approved fundraising and a stock split in the ratio of 1:10.

On March 13, 2025, Gensol Engineering Ltd received a board nod to split its stock in the ratio of 1:10 and also to raise around ₹600 crore through the issuance of warrants and foreign currency convertible bonds.

The battered engineering, procurement and construction (EPC) player intends to raise ₹400 crore through the "issuance of foreign currency convertible bonds or American depository receipts or global depository receipts and/or other global listed/unlisted securities with options of conversion into equity shares of the company", said an exchange filing.

The board has also approved raising ₹199.99 crore through the issuance of 3.57 crore warrants to promoter Jasminder Kaur on a private placement basis.

Gensol Engineering was established in 2012 by Anmol and Puneet Singh Jaggi. The company specialises in end-to-end engineering, procurement, and construction (EPC) services for solar power projects globally.