Gensol Engineering Share Price: The small-cap stock, Gensol Engineering, hit a 5% lower circuit on Wednesday, April 16, after the new interim order slammed on the company by market regulator Sebi. This new order has pushed Gensol to halt its stock split corporate action in the ratio of 1:10. In the early trade, Gensol only witnessed sellers but no buyers. Let's understand the crisis at Gensol with the market watchdog.
Gensol Engineering Share Price:
At the time of writing, Gensol Engineering's stock price froze at its 5% lower circuit to Rs 123.65 on BSE, with a market cap of Rs 469.90 crore. The latest price is also Gensol's 52-week low.
In general terms, lower circuit means that there are several buyers in a stock, but no sellers during that day. In the intraday trade, the stock will not move beyond that limit once touched.
Accordingly, Gensol is down by 89% from its 52-week high of Rs 1,125.75 apiece.
Gensol Engineering Stock Split Details:
Earlier this year, General Engineering's board approved the alteration of the capital of the Company by subdivision/split of existing equity shares of the Company from 1 (One) equity share having a face value of Rs. 10/- (Rupees Ten only) each, fully paid-up, into 10 (Ten) equity shares having face value of Rs. 1/- (Rupees One only) each, fully paid-up. Hence, the stock split ratio will be 1:10, and for the first time by Gensol.
The record date was not announced. However, the latest SEBI order could delay the record date announcement.
Why Did Sebi Ask Gensol To Halt Its Stock Split?
Gensol is accused of share price manipulation and delays in servicing debt obligations, which led SEBI to conduct an extensive investigation on the company.
The engineering company's journey as a listed company began on October 15, 2019, with its debut on the BSE SME platform at that time. Nearly 5 years later, Gensol was listed on BSE and NSE's mainboard on July 03, 2023.
The findings of Sebi highlighted that Gensol's growth over the last few years has been impressive. It cited date available on Screener.in, that Gensol's sales grew to Rs 1,152 crore in FY-2024 from Rs 61 crore in fiscal 2017, on a standalone basis. The trailing 12-month data shows that its sales went up to Rs. 1,297 crore.
During that period, Gensol's operating profit too skyrocketed from Rs 2 crore to Rs 209 crore, and net profit jumped from Rs 2 crore to Rs 80 crore.
Its balance sheet turned out to be equally impressive. Gensol's total liabilities/balance sheet size expanded from Rs 10 crore in FY 2017 to Rs 2,202 Crore in the first half of FY 2025. During this period, Gensol's borrowings climbed from NIL in FY 2017 to Rs 1,045 Crore in the first half of FY 2025, after touching Rs. 1,260 Crore in FY 2024.
Not just that, Gensol recorded a massive surge in its public shareholding pattern, eventually pushing the promoter's group holding to as low as 35%.
Data that Sebi provided showed that the number of shareholders increased from a mere 155 in FY 2020 (the year in which the company was listed on the BSE SME Platform) to 1,09,872 as of March 31, 2025. During this period, promoter holding in Gensol came down from 70.72% in FY 2020 to 35% as on March 31, 2025.
As per the latest shareholding pattern, Gensol's promoter group holding held 35.1250% in Gensol with 13,348,359 equity shares. The promoters are only 3. On the other hand, public shareholding stood at 109,869 investors with 24,654,075 equity shares, accounting for 64.8750% stake in Gensol. In total, there are 109,872 shareholders with 38,002,434 equity shares, together holding 100% of Gensol.
Due to the strong rise in the public shareholders group, the market capitalization of Gensol zoomed mightily as well. Last year, Gensol touched its 52-week high of Rs 1,126 per share, which brought its m-cap to Rs 4,300 crore at that price. By end of April 11, 2025, Gensol was around Rs 133 per share and its market cap stood at Rs 506 crore. This has fallen further during the latest performance.
So where is the problem? The issue occurred when Sebi received received a complaint in June 2024, relating to manipulation of share price and diversion of funds from GEL and thereafter, started examining the matter.
Another shock for Gensol appeared when two credit rating companies ICRA and CARE Edge downgraded Gensol's ratings due to delays in servicing debt obligations. Not only that ICRA claimed to have received feedback from sources related to Gensol's lenders and about the ongoing delays in debt servicing.
In March 2025, ICRA announced 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."
Following this, Sebi SEBI called for information from the CRAs regarding the downgrade of the ratings assigned to Gensol. The CRAs submitted that pursuant to news reports concerning default by BluSmart Mobility Private Limited (BluSmart), a related party of Gensol, on February 24, 2025, the CRAs initiated a review of the ratings assigned to the instruments of Gensol.
Why Gensol responded to CRA's queries and provided the details of default by BluSmart, the company claimed that it was regular in serviing its debt and that BluSmart's default had no impact on them. However, what was noted is that Gensol provided the statements of all lenders except those of Indian Renewable Energy Development Agency Ltd. (IREDA) and Power Finance Corporation (PFC).
However, upon seeking confirmation from IREDA and PFC regarding the issuance of the Conduct Letters and NOCs, both the lenders categorically denied having issued such letters, Sebi's note said.
SEBI subsequently called for detailed information from IREDA and PFC regarding the debt servicing status of loans sanctioned to Gensol, along with the loan sanction letters and account statements. On reviewing the information submitted by the aforesaid lenders, multiple instances of default by the company in servicing their loans were observed, it added.
Details of term loans of Gensol from IREDA and PFC showed that out of Rs 977.75 crore loan availed by Gensol, about Rs 663.89 crore was utilized for buying 6,400 Electric Vehicles, which is as per Gensol's submission. The submissions revealed that Gensol procured EVs and subsequently leased them to its related party, BlueSmart.
However, it was found out that Gensol only procured 4,704 electric vehicles (EVs) as of now, compared to 6,400 EVs for which it had secured funding. This was corroborated Go-Auto who was the supplier of these EVs. Go-Auto confirmed that they received a total consideration of Rs 567.73 Crore for 4,704 EVs sold to Gensol.
But Sebi noticed that records show that the company received loans aggregating Rs. 663.89 Crore for the stated purpose from IREDA and PFC. Gensol was to provide an additional equity (margin) contribution of 20%, bringing the total expected deployment of approximately Rs. 829.86 Crore for the purchase of 6,400 Electric Vehicles.
Based on the above figures, Sebi said, " an amount of Rs. 262.13 Crore (Rs. 829.86 Crore - Rs. 567.73 Crore) remains unaccounted, even though more than a year has passed since the Company availed the last tranche of the above mentioned financing."
Sebi observed that once the funds were transferred from Gensol to Go-Auto, ostensibly for the purchase of EVs, they were, in most of the instances, either transferred back to the company itself or routed to entities that were directly or indirectly related to Anmol Singh Jaggi and Puneet Singh Jaggi, promoters and directors of Gensol.
Hence, Sebi found default in Gensol's debt servicing. It said, "the prima facie findings have shown mis-utilization and diversion of funds of the Company 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."
Gensol has attempted to mislead SEBI, the CRAs, the lenders, and the investors by submitting forged conduct letters purportedly issued by its lenders, SEBI said.
Thereby, in an interim order, Sebi said the prima facie evidence of blatant violation of rules of corporate governance is writ large over the workings of the company. The diversion of funds of the company 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. 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.
Thus, Sebi added that investors need to be made aware of the alleged wrongdoings. It also said, "Gensol recently announced a stock split of its shares in the ratio of 1:10, which is likely to attract more retail investors to the scrip. At this stage, allowing this corporate action may not be in the interest of the investors."
Hence, SEBI has directed Gensol to put its stock split corporate action on hold. The regulator further barred Gensol and its promoters from accessing capital market.
SEBI also has announced the appointment of a forensic auditor to examine the books of accounts of Gensol and its related parties.
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