MUMBAI: The actions of two promoters of once high-flying Gensol Engineering is a case study in complete disregard for laid down corporate governance norms. Their deeds included illegal fund diversion for personal enrichment, stock price manipulation, forgery of ‘no default’ letters from lenders like IREDA and PFC to falsely project there was no default by the company, and misleading Sebi.
The two promoters of now disgraced company, Anmol Singh Jaggi and Puneet Singh Jaggi, used hundreds of crores rupees of the entity as they wished, a Sebi investigation showed. The interim investigation revealed that the two had systematically used loans from several creditors, taken in the name of Gensol, to buy a luxury flat in The Camellias in Gurugram and to jack up Gensol’s stock price. Not only this, the loans were used for personal benefit through their private ventures and for purposes other than for which they were taken.
Sebi’s investigation revealed that the two brothers, among other expenses for personal use from diverted funds, spent Rs 26 lakh to buy golf sets, spent nearly Rs 23 lakh to pay credit card dues, around Rs 8 lakh for interior decoration. In one of the several instances of fund diversions, Gensol transferred Rs 775 crore to Go-Auto, an auto dealership through which it bought electric vehicles for BluSmart, a ride hailing company. Of this, about Rs 570 crore was used to buy EVs for BluSmart. Of the balance Rs 205 crore, Rs 43 crore was diverted to buy the luxury flat in Gurugram, developed by real estate major DLF. Initially booked in the name of the mother of the two promoters, the transaction was later reversed in the name of Capbridge Ventures, a partnership of the two Jaggi brothers.
On Tuesday, Sebi barred the two promoters from the securities markets until further notice. The regulator also ordered a forensic audit of Gensol’s books. In the 29-page report by Ashwani Bhatia, whole time member, Sebi, it also detailed how company funds were diverted to jack up share prices of the company.
It used a company named Wellray, an arm of Gensol, to trade in the shares of the company and create an artificial market to inflate the stock price. For more than two-and-a-half years till Dec 2024, about 99% of the stock’s volume was created using funds from Wellray. “What we are witnessing is not just financial mismanagement – it’s a full-scale betrayal of public trust,” Sebi in its order noted. “Promoters were running the company like a personal piggy bank.”
The report said that the funds diverted by the two brothers may require write-offs from Gensol’s accounts, leading to investor losses.