Gensol Engineering Faces Insolvency Proceedings Due to Unpaid Debt of 510 Crores by IREDA
Things are looking grim for Gensol Engineering, as the Indian Renewable Energy Development Agency (IREDA) has slapped them with an insolvency plea due to a staggering Rs 510 crore loan default. This move comes just weeks after the Securities and Exchange Board of India (SEBI) barred the company's top guns, Anmol Singh Jaggi and Puneet Singh Jaggi, from the securities market for fund diversion and governance lapses.
In a recent stock exchange filing, IREDA explained why they took this drastic step. After repeated attempts, Gensol failed to repay the aforementioned loan, putting the value of equity holdings at risk. The National Company Law Tribunal (NCLT) has scheduled a hearing for the insolvency petition on June 3, 2025. If admitted, all creditors would be required to submit their claims with the court-appointed resolution professional for debt resolution.
IREDA isn't the only one pointing fingers at Gensol. Power Finance Corporation (PFC) has also raised concerns over similar allegations. Back in April, IREDA lodged a complaint with the Economic Offences Wing against Gensol, accusing them of falsifying documentation and initiating an internal review.
The ongoing SEBI investigation reveals allegations of the duo misappropriating funds for personal luxury purchases and debt defaults. It also includes claims that Gensol, among other things, defaulted on loans used to finance electric vehicles for BluSmart Mobility. In late April, authorities raided Gensol's premises, seizing documents and electronic devices, and ordered a forensic audit of the company.
The Regulatory onslaught has taken a heavy toll on Gensol. The turmoil has led to a near 95% fall in its share price, slowly recovering from its 52-week highs. If accepted by NCLT, the insolvency petition would wipe out the value of Gensol's equity shares completely.
The financial sector isn't the only one keeping a close eye on this ongoing saga. Credit rating agencies, such as CARE Ratings and ICRA, have already downgraded Gensol's bank facilities due to concerns related to falsified debt servicing documents. This move highlights the serious corporate governance lapses at Gensol, contributing to investor and creditor concerns.
While Power Finance Corporation isn't in the limelight like IREDA or SEBI, it's important to note that both have filed similar allegations against Gensol. PFC, a state-owned renewable energy financier, hasn't been directly mentioned in the current dispute, with IREDA being the key litigant pushing for insolvency proceedings.
- The financial market is closely observing the ongoing trouble at Gensol Engineering, as the company's share price has nearly halved due to allegations of corporate governance lapses.
- In addition to the insolvency plea lodged by IREDA, Power Finance Corporation (PFC) has also raised concerns over similar allegations concerning Gensol, highlighting the extensive reach of these issues.
- The ongoing SEBI investigation into Gensol's top executives has uncovered claims of misappropriating funds for personal luxury purchases and debt defaults, casting a shadow over the company's financial sector credibility.
- Credit rating agencies like CARE Ratings and ICRA have already downgraded Gensol's bank facilities, indicating growing concerns about the company's financial health and integrity in the investment industry.
