Why is Everyone Talking About Gensol Engineering?

Gensol Engineering is a prominent player in the renewable energy sector, mainly focused on solar consultation and EPC services.

The company offers end-to-end solar power solutions, including engineering, procurement and construction, as well as electric mobility offerings.

Its consulting arm provides services such as project advisory, detailed engineering, construction supervision, quality control, and technical due diligence for solar projects across India and globally.

Through its EPC division, Gensol executes turnkey solar projects with an international presence, supported by a team of over 180 engineers.

Gensol Engineering shares have been grabbing headlines. The stock has hit the 5% lower circuit for 16 straight sessions, plummeting to an intraday low of Rs 116.5 on Thursday.

In just two weeks, the company has lost over 70% of its market value, according to Bloomberg.

This dramatic fall comes after a 200% rally from its listing to a peak of Rs 1,376 in early 2024.

So far in 2025, the stock has crashed 84%, wiping out massive investor wealth.

What Triggered the Massive Crash?

The dramatic fall follows an interim order issued by the market regulator against Gensol Engineering and its promoters-Anmol Singh Jaggi and Puneet Singh Jaggi-over allegations of fund diversion and serious lapses in corporate governance.

The order accused the promoters of treating the listed company like their personal enterprise, siphoning off funds to related parties and indulging in questionable expenditures.

The market regulator highlighted that there was a complete breakdown of internal controls and corporate governance norms within Gensol Engineering.

It was observed that the company's funds had been routed to related parties and used for unrelated expenses, as though the funds were at the disposal of the promoters for personal use.

How Big Was the Loan Exposure?

Between 2021 and 2024, Gensol secured term loans worth Rs 9.8 billion (bn) from the Indian Renewable Energy Development Agency (IREDA) and Power Finance Corporation (PFC).

Out of this, Rs 6.6 bn was picked up to buy 6,400 electric vehicles, which were leased to BluSmart.

Additionally, Gensol was expected to contribute to a 20% equity margin, taking the total deployment target up to about Rs 8.3 bn.

However, the company revealed in the February 2025 exchange filing that it has purchased only 4,704 EVs so far. Go-auto, the supplier, also confirmed the sale of 4,704 vehicles for Rs 5.7 bn. It left a significant difference of Rs 2.6 bn.

Where Did the Money Go?

According to the market regulator, allegedly unaccounted money was used by the promoters for individual luxury.

The investigation revealed transactions involving the purchase of a luxury apartment at "The Camellias" in DLF Gurgaon, a high-end golf set, settlement of personal credit card bills, and fund transfers to close relatives.

These revelations form a key part of the regulator's case against the misuse of company funds and poor corporate governance.

Independent Director Resigns Amid Turmoil

The crisis deepened with the sudden resignation of Gensol's independent director, Arun Menon. In a letter addressed to Anmol Singh Jaggi, Menon expressed concerns about the company's increasing debt burden and its use of borrowed funds to support unrelated business expansions.

He said that despite offering support for debt restructuring in mid-2024, there had been no meaningful engagement from the company's management. He also cited professional limitations due to his employment at a private equity-backed firm, which restricts holding directorships in listed entities.

Menon's resignation came just a day after the regulator's interim order and was followed by a confirmation from Gensol in a regulatory filing. The company also stated that Menon would step down from all committee roles with immediate effect.

In his resignation letter, Menon highlighted repeated but unsuccessful attempts to engage with the company secretary and CFO regarding the firm's debt position. He also revealed that he had earlier expressed a desire to resign, but was asked to stay on until the IPO of Matrix was completed.

Stock Split on Hold

The regulator has also directed the company to suspend its recently announced stock split in a 1:10 ratio. Just a few days before the interim order of the regulator, Gensol Engineering announced a stock split in a ratio of 1:10, reducing the face value of its shares from Rs 10 to Re 1.

While the purpose of the stock division is usually to improve liquidity and make shares more economical for small investors, the timing raised a red flag.

The market regulator said the decision to initiate a split came when the promoters had already begun reducing their stake.

In fact, between January and March 2025, the promoter shareholding fell from 53% to 37%. It gave rise to concerns that the purpose of split was intended to create market stimulation and attract retail investors despite the company's underlying financial stress.

Citing the risk of misleading shareholders, the regulator emphasized that allowing the split to move forward in the present circumstances - especially when the promoters themselves were selling out - would not be in the interest of minority shareholders.

A Close Look at the Financials

In the December 2024 quarter, Gensol's net sales rose 30.5% to Rs 3,445 million (m), compared to Rs 2,640 m in the same period last year.

Meanwhile, it reported a 6.1% decline in the net profit to Rs 169 m, down from Rs 180 m.

During the quarter, Gensol Engineering secured multiple major engineering-procurement-construction (EPC) contracts, including a significant contract from a renowned public sector undertaking for the development of a 275 MW Solar PV Project in Gujarat.

Additionally, it secured a contract with NTPC Renewable Energy for the development of a 225 MW-AC (276 MWDC) solar PV system at GSECL Solar Park, Gujarat.

For FY24, the company reported a 22.1% decline in revenue, falling to Rs 4,631 m from Rs 5,943 m in FY23.

However, it managed to turn profitable, posting a net profit of Rs 529 m, a significant recovery from a net loss of Rs 136 m in the previous year.

Gensol Engineering Financial Snapshot (FY20-24)

(Rs m, Consolidated)	FY20	FY21	FY22	FY23	FY24
Net sales	807	640	1,604	3,980	9,631
Sales Growth (%)	(-2.7)	(-20.8)	150.8	148.1	142
Net Profit	22	32	111	233	535
Net Profit Margin (%)	2.7	5	6.9	5.9	5.6
Return on Equity (%)	6.7	8.8	23.9	11.3	16.4
Return on Capital Employed (%)	14.1	14.2	23.2	8.99	15.9

Data Source: Equitymaster

Over the past five years, sales has compounded at a CAGR of 63.3%. While its profitability has compounded at a CAGR of 52%,

The company's five-year average ROE and ROCE stand at 13.4% and 15.2%, respectively.

What Next?

The market regulator has now initiated a forensic audit of Gensol Engineering and its associated entities.

The company has pledged full cooperation with the investigation and stated that both Anmol and Puneet Jaggi have stepped back from any managerial roles following the regulator's directives.

What the audit ultimately uncovers, and the consequences that follow, remain to be seen.

Conclusion

The global renewable energy market was valued at US$ 1.1 tn in 2022 and is projected to grow at an 8% CAGR, reaching nearly US$ 2 tn by 2030.

On the other hand, India's renewable energy sector, which is currently about US$ 150 bn, is expected to double in size within the same period. Development is expected to be operated by aggressive renewable energy installation.

The country has set a target to install 500 GW of renewable energy by 2030, which is currently more than 180 GW. Gensol is ready to benefit from it as a renewable energy player.

However, amid the ongoing turmoil, it remains to be seen how the company navigates these challenges and whether can hold on to investors' trust.

Investors should evaluate the company's fundamentals, corporate governance, and valuations of the stock as key factors when conducting due diligence before making investment decisions.

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