Gensol Engineering is facing increased turmoil as its Chief Financial Officer, Jabirmahendi Mohammedraza Aga, resigned from his position with immediate effect. This exit comes amid ongoing regulatory investigations and a wave of departures from top management. Aga cited these factors, along with internal disarray, as the primary reasons for his decision.
In his resignation letter, dated May 16, Aga expressed concerns about the "significant challenges" the company faces due to multiple regulatory investigations. He also pointed to the recent resignations of Managing Director Anmol Singh Jaggi and Whole-time Director Puneet Singh Jaggi as indicators of growing disorder within the organization. Aga highlighted that the disorganization of critical data across various departments is hindering the company's ability to effectively respond to the ongoing inquiries because of a lack of a cohesive support system. He stated that the immense pressure from these circumstances has adversely affected his physical and mental well-being, leading to a complete loss of focus. Therefore, he felt it was in the best interest of the company to resign during these trying conditions.
The troubles at Gensol Engineering have deepened recently. The National Company Law Tribunal (NCLT) issued a notice to the company in response to an insolvency petition filed by the Indian Renewable Energy Development Agency (IREDA). IREDA is seeking insolvency proceedings over an alleged default of ₹510 crore. The NCLT has directed Gensol to file its reply, with the next hearing scheduled for June 3. During the hearing, IREDA urged the bench to appoint an Interim Resolution Professional (IRP) to take control of the company, citing the mass exodus of top leadership following a regulatory order by the Securities and Exchange Board of India (SEBI). However, the tribunal declined to appoint an IRP at this stage. If the NCLT accepts the insolvency petition, all of Gensol's creditors will need to submit their claims to the resolution professional appointed by the court, and the company's equity value may potentially be lost.
Gensol Engineering has been under increased regulatory scrutiny since SEBI issued an interim order on April 15, barring Gensol Engineering and promoters Anmol Singh Jaggi and Puneet Singh Jaggi from accessing the securities markets. The order was issued in connection with alleged fund diversion and corporate governance lapses. SEBI's action followed a complaint filed in June 2024 regarding share price manipulation and fund misappropriation at Gensol Engineering. SEBI stated that Gensol had raised ₹975 crore in loans from institutions like IREDA and PFC for buying electric vehicles, but only a part of the money was used for that purpose. The probe showed that more than ₹200 crore was routed through a car dealer and cycled back to promoter-linked entities. SEBI also found that Gensol submitted forged documents to credit rating agencies to falsely claim timely debt repayments.
The Corporate Affairs Ministry has also ordered a probe into the affairs of Gensol Engineering and BluSmart Mobility for alleged violations of companies law. The Institute of Chartered Accountants of India (ICAI) is likely to complete the review of the financial statements of Gensol Engineering Ltd and BluSmart Mobility in six months. Gensol is also being probed by the Enforcement Directorate (ED).
Despite these challenges, Gensol Engineering's share price ended at a 5% upper circuit at ₹66.29 apiece on the BSE on Friday. On Wednesday, Gensol Engineering shares also rose by 5 percent to reach Rs 60 each. The market capitalization of the firm stood at ₹228.55 crore.
