Gensol Engineering hits 5% lower circuit on SEBI’s crackdown on promoters; BluSmart-linked stock slumps 32% in 6 sessions

Shares of crisis-hit Gensol Engineering extended losing streak for the sixth straight session on Wednesday, hitting 5% lower circuit in opening trade after the SEBI’s crackdown against its promoters. The capital market regulator has barred promoter brothers Anmol Singh Jaggi and Puneet Singh Jaggi from holding any directorial or key managerial positions in the company, engaged in solar energy consultancy and engineering, procurement and construction (EPC) solutions in the renewable space. The regulator has also stopped the company's planned stock split, and named a forensic auditor to investigate the matter further.

Weighed down by the development, Gensol Engineering share price dropped 5% to touch its fresh 52-week low of ₹123.65 on the BSE, while its market capitalisation slipped to ₹470 crore. The microcap stock has fallen 32% in six trading days, while it is down 89% from its 52-week high of ₹1,125.75 touched on June 24, 2024.

The Securities and Exchange Board of India (SEBI) on Tuesday issued an interim order against Gensol Engineering and its promoters after finding lapse in financial mismanagement and diversion of funds. The Jaggi brothers, who are also co-founders of ride-hailing service BluSmart, have been asked to square off the existing derivative positions in 7 days or on expiry.  

The regulator, in its 29-page interim order, has said it will appoint a forensic auditor to examine the books of the accounts of Gensol and its related parties, and has asked the audit firm to submit the report in six months from the date of appointment.

The action was taken after the SEBI conducted an investigated based on a complaint received in June 2024, alleging serious governance lapses, fund diversion and submission of falsified documents. "The prima facie findings have shown mis-utilisation 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 SEBI order said.

The adverse order against Jaggi brothers will also impact business of cash-strapped BluSmart, India’s first all-electric ride-hailing aggregator, as they are co-founders of the company. Despite raising about ₹1,245 crore in 14 funding rounds, by 2024, the company was struggling to raise fresh funds, leading to its founders—Puneet and Anmol Singh Jaggi—infusing their funds to keep the company afloat, while searching for investors. The funding crisis is likely to balloon as it would be very difficult for BluSmart to find new investor as cases against Jaggis would compound its problems.

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