Gensol Engineering Faces Over 5 Major Corporate Governance Issues

ED Raids, SEBI Bans, and Allegations of Fund Diversion Rock the Renewable Energy Firm

As of April 30, 2025, Gensol Engineering Ltd., a key player in India’s renewable energy and electric vehicle (EV) sectors, is embroiled in a series of corporate governance crises that have shaken investor confidence and drawn intense regulatory scrutiny. Known for its solar power engineering, procurement, and construction (EPC) services and EV solutions, the company is now grappling with at least five major issues: Enforcement Directorate (ED) raids, Securities and Exchange Board of India (SEBI) bans, allegations of fund diversion, complaints from financial institutions, and a plummeting stock price. This article provides a detailed, up-to-date analysis of these challenges, their implications, and the key figures involved.

1. ED Raids and Seizures: A Regulatory Crackdown

On April 27, 2025, the ED conducted high-profile raids at Gensol Engineering’s offices in Gurugram and Ahmedabad. Operating under the Foreign Exchange Management Act (FEMA), 1999, and the Income Tax Act, 1961, the ED seized critical documents, electronic devices, and financial records. Orders were issued to major banks, including Axis Bank, HDFC, and ICICI Bank, though specific details remain undisclosed. According to a regulatory filing, the company’s Chief Financial Officer, Jabir Mahendi M Aga, noted that the financial implications of these actions are uncertain, and Gensol is pursuing legal remedies to address the situation.

The raids are part of a broader investigation into suspected financial irregularities and potential breaches of foreign exchange regulations. The ED’s actions signal a serious escalation in the scrutiny of Gensol’s financial practices, raising concerns about compliance and transparency.

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2. SEBI’s Interim Order: Promoters Barred from Markets

The ED raids followed an interim order by SEBI on April 15, 2025, which barred Gensol’s promoters, Anmol Singh Jaggi and Puneet Singh Jaggi, from participating in the securities markets. The order, detailed in a Business Standard report, cited allegations of fund diversion and corporate governance failures. SEBI also halted the company’s planned stock split and mandated a forensic audit to investigate further.

SEBI’s findings suggest that loans intended for business purposes, such as EV procurement and EPC contracts, were misused for personal expenses. This has not only damaged Gensol’s credibility but also highlighted significant lapses in its governance structure, prompting calls for stricter oversight.

3. Allegations of Fund Diversion and Financial Misconduct

Central to Gensol’s troubles are allegations of fund diversion and financial misconduct. Investigations have revealed that loans from institutions like Power Finance Corporation (PFC) and Indian Renewable Energy Development Agency (IREDA) were allegedly diverted to purchase assets in the names of the promoters, their relatives, or shell companies. These findings, reported by CNBC TV18, have triggered additional probes under the Prevention of Money Laundering Act (PMLA).

Complaints from PFC and IREDA about document fraud and non-repayment of debts have further compounded the issue. The scrutiny began after credit rating downgrades by agencies like CARE Ratings and ICRA, prompted by delays in debt servicing by BluSmart Mobility, a related party. These allegations underscore the need for robust financial oversight within the company.

4. Founders Under Scrutiny: Anmol and Puneet Singh Jaggi

The founders, Anmol Singh Jaggi and Puneet Singh Jaggi, are at the heart of the controversy. As promoters and directors, they are accused of orchestrating the alleged financial misconduct. Puneet Singh Jaggi was detained by the ED from a Delhi hotel on April 24, 2025, while Anmol Singh Jaggi is reportedly in Dubai, as noted in the CNBC TV18 report. Their actions have drawn significant regulatory and public attention.

Key Facts About the Founders

The brothers’ alleged misuse of funds has not only jeopardized their leadership but also raised questions about the company’s governance framework.

5. Stock Market Turmoil: A Sharp Decline in Value

The regulatory actions have taken a severe toll on Gensol’s stock performance. On April 29, 2025, the company’s shares hit a 5% lower circuit, trading at Rs 86.50 per share, as reported by Moneycontrol. Over April 2025, the stock lost more than 50% of its value, and from its peak of Rs 1,331 in February 2024, it has fallen by nearly 85%. The market capitalization has plummeted from Rs 4,131 crore to Rs 309.2 crore, a 92% decline.

Gensol debuted on the stock market through an SME IPO in September 2019, with promoters initially holding a 96% stake. This has since reduced to a negligible fraction, while retail individual shareholders have increased their holdings, making them particularly vulnerable to the ongoing crisis.

6. Broader Implications for Corporate Governance

Gensol Engineering’s troubles highlight systemic issues in corporate governance within India’s corporate sector. The allegations of fund diversion, regulatory violations, and lack of transparency serve as a cautionary tale for other companies. As SEBI and the ED intensify their efforts to curb financial misconduct, businesses must prioritize ethical practices and robust oversight to maintain investor trust.

You Learn: A Critical Juncture for Gensol

Gensol Engineering Ltd. faces a multifaceted crisis that threatens its survival. The ED raids, SEBI bans, allegations of fund diversion, complaints from financial institutions, and a collapsing stock price have exposed deep-rooted governance issues. The ongoing investigations and forensic audit will be pivotal in determining the company’s future. For now, Gensol serves as a stark reminder of the importance of transparency and accountability in corporate India.

(India CSR)