Shares of Gensol Engineering Ltd (GEL) are likely to stay in focus on April 16 after market regulator SEBI passed a strict interim order against the company and its promoters. The action was taken due to serious concerns about misuse of funds and wrong information being given to investors.
SEBI has barred GEL promoters Anmol Singh Jaggi and Puneet Singh Jaggi from accessing the equity markets. They are also banned from acting as directors or key decision-makers in any listed company. According to SEBI, the promoters were using company money like it was their personal account, and funds were transferred to related parties without proper checks.
The order clearly mentioned that there was a complete failure in internal controls and corporate governance. SEBI has also directed Gensol to put its recently announced stock split on hold. Just a few days ago, GEL had announced a stock split in the ratio of 1:10, which was expected to attract more retail investors.
SEBI also added that the shareholding of the promoter in the company has already declined significantly. There is also a chance that they sell more shares through the market, which can misguide unsuspecting investors. The regulator believes that the stock split has been announced with an attempt to induce investor interest in the stock when the company is already involved in severe governance problems.
Shares of Gensol Engineering have plummeted for quite a while now. The stock declined by 46% in one month, and in the last one year, by as much as 86%. The free-fall follows news of mismanagement of funds coupled with increasing debt.
With SEBI intervening to put an end to the stock split, as well as prohibiting promoters from participating, the company is now under tight watch. Investors will closely monitor later developments and potential long-term effect to the operations of the company as well as to share price.
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Source: Moneycontrol.
News Desk
