Gensol Engineering Shares Surge 5% Despite Insolvency Filing by IREDA

Market Performance

Gensol Engineering shares witnessed a sharp rise, hitting a 5% upper circuit on May 15, 2025. The stock was trading at ₹62.44 on the BSE at 10:40 AM, marking its third consecutive upper circuit.

• Current Price: ₹62.44
• 52-Week High: ₹1,124.90
• 52-Week Low: ₹51.25
• Market Capitalization: ₹240 crore

This rally comes even as the company faces serious financial and regulatory challenges.

Main News

On May 14, 2025, the Indian Renewable Energy Development Agency (IREDA) applied with the National Company Law Tribunal (NCLT) under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016 against Gensol Engineering Limited, citing a loan default of ₹510 crore.

Key Developments:

• Insolvency Filing by IREDA for a default amount of ₹510 crore.
• This legal action comes amid an ongoing investigation by SEBI into alleged fund diversion and governance lapses.
• SEBI had earlier barred the company and its promoters from accessing the securities market.

Company Details

Leadership Exit

Following SEBI’s interim order in April 2025:

• Anmol Singh Jaggi, the Managing Director, and
• Puneet Singh Jaggi, the Whole-time Director,
  resigned from their posts on May 12, 2025.

SEBI’s interim findings accused the Jaggi brothers of misusing company funds for personal luxury purchases, including:

• Buying a high-end apartment in DLF Camellias, Gurgaon
• Splurging on luxury goods, including golf sets
• Paying off personal credit cards and
• Transferring funds to relatives

Legal Proceedings

Gensol Engineering had appealed SEBI’s order to the Securities Appellate Tribunal (SAT), which allowed the company to respond within two weeks. SEBI is directed to hear the response and issue a final order within four weeks. However, the tribunal made no observations on SEBI's initial findings.

Financial Discrepancies

Between 2021 and 2024, Gensol Engineering raised large sums through term loans:

• Total Loans Raised: ₹978 crore
  • IREDA & PFC were the lenders
• Target Investment: Acquire 6,400 EVs for leasing to BluSmart
• Expected Total Investment (including 20% equity margin): ₹830 crore

However, only 4,704 EVs were procured at a cost of ₹568 crore, resulting in:

• Unexplained Financial Gap: ₹262.13 crore

This discrepancy remains unresolved even a year after the final funding tranche was received.

Summary

Despite a sharp rise in Gensol Engineering shares, the company is facing major legal and financial scrutiny:

• Insolvency proceedings have begun for a ₹510 crore default
• SEBI has accused the promoters of fraudulent fund diversion
• The company has been asked to appoint a forensic auditor to review its books
• Serious concerns over corporate governance and financial transparency persist