Shares of Gensol Engineering plummeted another 5% on Thursday, hitting the lower circuit and plunging to a fresh 52-week low of Rs 116.54, as the company and its promoters grapple with allegations of mis-utilisation and fraudulent diversion of funds. The stock has now slid 90% from its all-time peak. This is the third straight session when the company has hit the lower circuit.
The meltdown was triggered by an interim order from the market watchdog Securities and Exchange Board of India, which banned promoters Anmol Singh Jaggi and Puneet Singh Jaggi from participating in the securities market, triggering their exit from the company’s board. The regulator also barred the company from going ahead with its 1:10 stock split.
SEBI had highlighted a ‘complete breakdown’ in corporate governance at the firm, accusing the promoters of treating Gensol’s funds like a 'personal piggy bank’ used for extravagant expenses, such as a luxury apartment in Gurgaon’s DLF Camellias and a golf set.
The regulator also cautioned against an expected further paring of stake by the promoters. The promoter holding in the company has already come down substantially, SEBI added.
The stock, currently, has a 100% applicable margin rate, and margin trading is not available for this stock. The ‘applicable margin rate’ refers to the percentage of a trade's value that an investor needs to deposit as collateral to use margin trading. It determines how much leverage an investor can use while buying or selling such securities and a higher margin rate might mean that the exchange or broker perceive the particular stock as riskier.
In response to the SEBI’s order, Gensol had said that it will fully cooperate with the forensic audit that will be conducted under the regulator’s direction. “The company is committed to providing the auditor with complete access to records and information to ensure a transparent and comprehensive audit process,” the company had said in an exchange filing.
