Gensol Engineering’s stock hit a 52-week low during trading on Monday, following alarming revelations from the Securities and Exchange Board of India (SEBI) regarding serious governance concerns. An inspection by the National Stock Exchange (NSE) indicated that Gensol’s electric vehicle (EV) manufacturing site in Pune was largely inactive, with only a handful of employees present during a recent visit. This stark observation has raised questions about the company’s operational integrity amid allegations of share price manipulation and fund misappropriation.

SEBI’s Investigation Findings

The interim order from SEBI, issued on April 15, shed light on Gensol’s questionable practices following a complaint made in June 2024. The investigation revealed a lack of manufacturing activity at Gensol’s facility, where a recent NSE visit discovered only two to three workers present. SEBI’s findings highlighted the following:

• Electricity Consumption: The maximum electricity bill recorded over the past year was just ₹1,57,037.01 in December 2024, suggesting minimal operational activity at the plant.
• Leased Property: The production site, located on leased land, showed no evidence of manufacturing operations.

Misleading Investor Communications

Gensol had previously announced receiving pre-orders for 30,000 EV units showcased at the Bharat Mobility Global Expo 2025. However, SEBI’s investigation found these were merely Memorandums of Understanding (MoUs) with nine organizations for 29,000 vehicles without clear pricing or delivery schedules. This inconsistency has led SEBI to conclude that Gensol may have provided misleading information to investors.

Financial Discrepancies and Allegations

Reports indicate that Gensol secured loans totaling ₹977.75 crore from IREDA and PFC between FY22 and FY24. Notably, ₹663.89 crore of this was earmarked for purchasing 6,400 EVs; however, the company procured only 4,704 vehicles, worth ₹567.73 crore. This discrepancy raises questions about the ₹262.13 crore that remains unaccounted for, as Gensol was expected to contribute 20% equity.

Fund Misappropriation Claims

Further scrutiny revealed that funds intended for EV purchases were allegedly redirected to Gensol and entities tied to the Jaggi brothers, the company’s promoters. Some of these funds appear to have been used for personal expenses, including the acquisition of a luxury apartment and financial transfers to relatives.

Regulatory Actions and Market Impact

In response to these findings, SEBI has implemented strict measures against the Jaggi brothers, barring them from participating in the securities market or holding any managerial roles within Gensol. Additionally, the planned 1:10 stock split has been halted, and both Anmol and Puneet Singh Jaggi have resigned from their positions on the company’s board.

Current Stock Performance

As of today, Gensol Engineering’s share price opened at an intraday low of ₹111.65 on the BSE. Equity analyst Rajesh Bhosale from Angel One noted that the stock is currently experiencing downward pressure and is trading in lower circuits. He advised traders to consider exiting their positions and pivoting to more stable investments given the negative developments surrounding the company.

In light of these events, Gensol Engineering’s future remains uncertain, and investors are urged to stay informed about ongoing regulatory actions and market conditions.