Shares of Gensol Engineering Ltd were locked at a 5% lower circuit on 21 April after the news came that the government is planning to start a probe by the Serious Fraud Investigation Office (SFIO) against the company and its promoters. 

The promoters of Gensol Engineering were accused of engaging in illegal fund diversification, which caused the company’s shares to drop for the eighth consecutive session.  

Earlier in September 2019, Gensol Engineering debuted on the public market with a small and medium-sized business (SME) initial public offering (IPO), in which its promoters owned a dominant 96% share. Now, that number has decreased to a “negligible” portion.

This sudden fall was not natural, according to a Securities and Exchange Board of India (Sebi) order. Instead, it was allegedly arranged through a network of deceptive disclosures, bogus transactions, and stolen funds, resulting in a near-complete promoter exit while naïve investors were kept in the dark.

The Director General’s (DG) and Registrar of Companies (RoC) offices are doing due diligence for the Ministry of Corporate Affairs (MCA) in the alleged fund diversion case involving Gensol Engineering.

Demand for the company’s Rs 18 crore IPO was moderate; it was subscribed for 1.3 times, with a total of Rs 23 crore in offers. The promoters’ stake fell to 70.72% following the listing.  

Gensol, a company that offers engineering, procurement, and construction (EPC) and solar consultancy services, moved to the mainboard in July 2023 in order to access a larger and more liquid investor base.

At 12:42 pm, the shares of Gensol Engineering were locked 5% lower at Rs 110.71 on NSE.

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