Gensol Engineering to Face Rs 510 Crore Insolvency Proceedings Against Indian Renewable Energy Development Agency Ltd
IREDA filed the insolvency petition under Section 7 of the Insolvency and Bankruptcy Code, weeks after lodging a complaint with the Economic Offences Wing (EoW) accusing Gensol Engineering of using forged documents and unauthorized promoter stake dilution.
Gensol Engineering, the parent company of electric vehicle startup BluSmart, has entered a critical phase as the Indian Renewable Energy Development Agency (IREDA) has initiated insolvency proceedings against it for defaulting on payments exceeding Rs 510 crore. This action follows a series of adverse regulatory findings and financial troubles that have severely impacted the company’s operations and market standing.
In a significant development, IREDA filed the insolvency petition under Section 7 of the Insolvency and Bankruptcy Code, weeks after lodging a complaint with the Economic Offences Wing (EoW) accusing Gensol Engineering of using forged documents and unauthorized promoter stake dilution.
Further compounding Gensol’s challenges, Power Finance Corporation (PFC) reported unpaid dues amounting to Rs 307 crore out of the Rs 352 crore it had lent to the company. PFC has also approached the EoW with its complaint, adding pressure on Gensol’s financial health.
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The turmoil has led to the resignation of the company’s top executives, Anmol and Puneet Singh Jaggi, following SEBI’s directive barring them from holding directorial or key managerial positions. SEBI’s interim order highlighted serious governance lapses, including allegations of price manipulation and fund misappropriation by the Jaggi brothers. The regulatory body also halted Gensol’s proposed 1:10 stock split, which was seen as a potential move to attract retail investors.
Market reactions have been swift, with Gensol’s stock hitting back-to-back 52-week lows amid the controversy. SEBI’s investigation revealed that Gensol’s Pune EV manufacturing plant showed minimal activity, with only a handful of workers present and electricity bills indicating near-nonoperation. Additionally, diverted funds were reportedly used for personal expenses such as purchasing a luxury apartment and transfers to relatives, raising red flags on corporate governance.
As a Small-Cap company struggling with governance and financial integrity, Gensol’s current crisis raises questions about its ability to recover and create shareholder value through dividends, bonus issues, or future IPO plans. Investors and market watchers will closely monitor the Quarterly Results and further regulatory updates, which will shed light on the company’s path forward.
Disclaimer: The article is for informational purposes only and not investment advice.