Gensol Engineering Limited did not get any relief from Securities Appellate Tribunal after the company had moved against April 15 order of SEBI on Friday and matter was heard today. After hearing SEBI and Gensol Engineering, the SAT directed SEBI to pass confirmatory order in four weeks. Gensol was given two-week time to respond to SEBI’s interim order. Gensol had failed to reply to SEBI's interim order before moving SAT.
Gensol Engineering argued that SEBI order is coming in the way of selling its subsidiaries and paying the financial institutions. Gensol also argued that depositories have wrongly interpreted the law and froze company’s demat account. Gensol argued that shares of its subsidiary companies should not be frozen as per SEBI interim order. Gensol also sought stay on forensic audit of the company till its heard by SEBI.
SEBI opposed to the relief sought by Gensol, SEBI said the IREDA and PFC have confirmed that company falsified documents and submitted fake conduct and NOC letters. Also, SEBI detailed how the loans availed were diverted for personal expenses, subscribing the preferential issue and trading in the shares of the company.
SAT heard both sides but did not give any relief to Gensol Engineering.
In its interim order SEBI had barred Gensol promoters Anmol Singh Jaggi and Puneet Singh Jaggi from accessing securities market until further orders. Jaggi brothers were also restrained from holding the position of a director or a Key Managerial Personnel in Gensol, until further orders. SEBI has alleged misutilisation of loans availed by Gensol Engineering Ltd (GEL) from PSU NBFCs, IREDA and PFC and diversion of these funds for personal expenses of promoters, including buying high end apartment in Gurgaon, purchasing luxury golf set and transferring the funds to relatives, amounting to serious lapses in corporate governance.
According to SEBI interim order, Gensol Engineering secured a total of Rs 977.75-crore loans from IREDA and PFC for buying electrical vehicles. Of the said loan amount Rs 663.89 Cr was meant for the purchase of 6,400 EVs. But company purchased only 4,704 EVs and leased to related company BluSmart. SEBI also confirmed the same from the EV supplier Go-Auto Private limited, Gensol had paid a total amount of Rs Rs 567.73 crore to the supplier. The SEBI order noted that Gensol was also to provide additional equity (margin) contribution of 20%, bringing the total expected deployment of approximately Rs. 829.86 crore for the purchase of 6,400 electric vehicles. Based on these figures, an amount of Rs. 262.13 Crore remains unaccounted.
EVs were procured by the company and subsequently leased to BluSmart, a related party.
SEBI's whole-time member Ashwani Bhatia noted in interim order that, “The Company’s funds were routed to related parties and used for unconnected expenses, as if the Company’s funds were promoters’ piggybank”.
SEBI has asked company to put its stock split announced on hold. Also, appointment of forensic auditor to examine the books of accounts of Gensol Engineering and its related companies within six months from the appointment.
Post SEBI interim order ED is investigating under forex rules violation law FEMA and Ministry of Corporate Affairs has also ordered investigation of the books of accounts of the company and related entities.
Moneycontrol had reported on April 4 that SEBI is likely to investigate the affairs of the company after rating agencies downgraded the rating and allegation of falsified document surfaced.
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