The Securities and Exchange Board of India (SEBI) has issued an interim order restraining Gensol Engineering Ltd (GEL) and its promoters, Anmol Singh Jaggi and Puneet Singh Jaggi, from participating in the securities markets with immediate effect. The market regulator’s move follows allegations of financial misconduct, including diversion of funds intended for the purchase of electric vehicles and corporate governance lapses, reported Business Today.
Further, the markets watchdog directed Gensol Engineering Ltd (GEL) to put on hold the stock split announced by it.
Company funds for personal use
According to the SEBI order, Anmol Singh Jaggi and Puneet Singh Jaggi diverted company loans for personal use - including the purchase of luxury real estate in Gurgaon.
Sebi noted that the promoters were running a listed public company as if it were a propriety firm. GEL's funds were routed to related parties and used for unconnected expenses as if the company's funds were promoters' piggy banks.
In a 29-page interim order, Sebi said, "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".
How funds were misused
As per SEBI’s interim order published Tuesday, an amount of ₹42.94 crore from a larger loan secured by Gensol was ultimately channelled through Capbridge Ventures – a firm controlled by promoter Anmol Singh Jaggi – to finance the purchase of a luxury apartment in DLF Camellias.
{{/usCountry}}As per SEBI’s interim order published Tuesday, an amount of ₹42.94 crore from a larger loan secured by Gensol was ultimately channelled through Capbridge Ventures – a firm controlled by promoter Anmol Singh Jaggi – to finance the purchase of a luxury apartment in DLF Camellias.
{{/usCountry}}Jaggi also used ₹50 lakh from the funds to invest in Ashneer Grover’s startup, Third Unicorn.
An amount of ₹6.20 crore was diverted to Anmol Singh Jaggi’s mother, while his wife received ₹2.98 crore. He allegedly spent ₹26 lakh on a golf set and ₹3 lakh on MakeMyTrip for personal travel.
The result of these transactions would mean that the diversions at some time need to be written off from Gensol's books, ultimately resulting in losses to the investors of the company.
"...prima facie evidence of a blatant violation of rules of corporate governance is writ large over the workings of the company. The diversion of funds of the company (GEL) 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," Sebi's whole-time member Ashwani Bhatia said in the order.
(With inputs from PTI)