Inside the Gensol Mess Uncovered by SEBI

The market regulator has alleged a complete breakdown of internal controls

- Nehal Chaliawala & Neha Joshi

On a cold winter evening in January 2022, a family in New Delhi was hosting about 200 people at their home, celebrating the folk festival Lohri. In the glow of the party, the host, a serial entrepreneur, told some guests about his ambition—he would become the first billionaire in the family.

That was not just wishful thinking. Along with his brother, the man, Anmol Singh Jaggi, was running a listed company and had plans to list two more in the next five years. He was betting on renewable energy and e-mobility, the hottest investor themes in the market.

At that moment, Jaggi couldn't have predicted that just three years later, his company would default on loans. And that he, and his brother, Puneet Singh Jaggi, would find themselves on the wrong side of the law.

The duo, on 15 April, was accused of securities fraud and forgery by the Securities and Exchange Board of India (Sebi), India's market regulator. Anmol Singh Jaggi is the chairman and managing director of the publicly-listed Gensol Engineering Ltd while his brother is a whole-time director.

In an interim order, Sebi minced no words when it summarized the affairs at Gensol. There was a complete breakdown of internal controls and corporate governance norms, it said. "The promoters were running a listed public company as if it were a proprietary firm. The company's funds were routed to related parties and used for unconnected expenses, as if the company's funds were promoters' piggybank," Sebi stated. The diverted funds would ultimately have to be written off from the company's books, resulting in losses to the investors, the regulator added.

The market regulator has barred the brothers from holding any executive or board position at Gensol or from trading in securities until further orders. It has also put on hold a proposed 1:10 stock split by the company and will be appointing a forensic auditor to comb through its books for irregularities.