What Caused Gensol Engineering’s Stock to Plummet Over 95%?
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Synopsis
Gensol Engineering Limited's stock has drastically fallen by over 95%, leading to investor losses of nearly Rs 4,000 crore. Investigations reveal serious allegations against its promoters involving fraudulent activities and misappropriation of funds. What does this mean for future investors and the company?
Key Takeaways
- Gensol Engineering's stock has fallen by over 95%.
- Investors have lost nearly Rs 4,000 crore.
- SEBI has taken action against the company's promoters.
- Funds were misappropriated for personal gains.
- NCLT has frozen Gensol's financial accounts.
New Delhi, June 11 (NationPress) Investors in Gensol Engineering Limited (GEL) have faced staggering losses nearing Rs 4,000 crore as the stock of this fraud-implicated firm plummeted by over 95%. On the National Stock Exchange (NSE) this Wednesday, Gensol's stock closed 2% lower at Rs 51.42, marking a steep decline of 95.42% from its peak.
In April, the Securities and Exchange Board of India (SEBI) took decisive measures against Gensol’s leading promoters, Anmol Singh Jaggi and Puneet Singh Jaggi, barring them from engaging with the securities market and from crucial management positions.
SEBI's investigation uncovered that Gensol had misappropriated funds acquired through a loan for an electric vehicle (EV) purchasing initiative.
The regulator disclosed that GEL's promoters had diverted funds intended for EV purchases to finance a luxury apartment in DLF's 'The Camellias' in Gurugram. Loans aimed at acquiring EVs for the ride-hailing platform BluSmart were rerouted through multiple entities for personal enrichment.
Further inquiries indicated that promoter Anmol Singh Jaggi allegedly transferred corporate funds to relatives for personal use. As per the directive, Jaggi sent Rs 6.2 crore to his mother and Rs 2.98 crore to his spouse. He also indulged in extravagant purchases from company funds, including Rs 26 lakh on a golf set, Rs 17 lakh on shopping at Titan, and over Rs 10 lakh on a spa treatment.
The market regulator established that Gensol Engineering secured a loan of Rs 978 crore from two government entities, IREDA and PFC, between 2021 and 2024. The Chairman and Managing Director of PFC, Parminder Chopra, publicly labeled the loan granted to Gensol Engineering as fraudulent, stating, "Based on our preliminary investigation, we have identified this as fraud."
Recently, the National Company Law Tribunal (NCLT) in Ahmedabad ordered the freezing and attachment of all financial accounts and lockers linked to Gensol Engineering Limited and its affiliates. This move follows a complaint by the Ministry of Corporate Affairs (MCA), which has charged the firm with severe corporate fraud and financial misconduct.
The goal is to halt any further financial misuse or evidence tampering, with the NCLT noting initial indications of serious misconduct by the company's promoters.
Point of View
It is crucial to highlight the importance of corporate accountability. The unfolding events surrounding Gensol Engineering illustrate the risks investors face in an ever-evolving market. NationPress remains committed to bringing our audience the truth and fostering transparency in corporate governance.
NationPress
13/06/2025
Frequently Asked Questions
What led to Gensol Engineering's stock decline?
Gensol Engineering's stock plummeted due to serious allegations of fraud against its promoters, who misappropriated funds intended for electric vehicle purchases.
How much have investors lost?
Investors have collectively lost nearly Rs 4,000 crore as a result of the stock's drastic decline.
What actions has SEBI taken against Gensol's promoters?
SEBI has barred Gensol's top promoters from accessing the securities market and holding key management positions due to their involvement in fraudulent activities.
What did the NCLT order regarding Gensol's accounts?
The NCLT ordered the freezing and attachment of all bank accounts and lockers related to Gensol Engineering to prevent further misuse of funds.
What is the significance of this case for investors?
This case serves as a warning to investors about the importance of due diligence and the risks associated with corporate governance failures.
