India's markets regulator on Tuesday barred Gensol Engineering's founders from holding key positions in the company after allegedly defaulting on debt repayment related to electric vehicle purchases for ride-hailing startup BluSmart.
In an interim order, the Securities and Exchange Board of India (SEBI) also restrained Gensol's founders, Anmol Singh Jaggi and Puneet Singh Jaggi, from participating in the securities market until further orders.
The regulator also barred the construction firm from conducting a 1:10 stock split approved on Saturday.
Gensol, Anmol Singh Jaggi and Puneet Singh Jaggi did not immediately respond to Reuters' requests for comment.
SEBI's order comes on the back of credit rating agencies downgrading their ratings on Gensol, citing concerns over its liquidity position and corporate governance practices.
Gensol availed loans worth 9.78 billion rupees (about $114 million) from Indian Renewable Energy Development Agency (IREDA) and Power Finance Corporation.
Majority of it was used to buy electric vehicles for BluSmart, an EV ride-hailing app also owned by the Gensol founders.
While Gensol has denied the defaults, SEBI cited information from IREDA and PFC and said the company has defaulted on those loans.
"The promoters were running a listed public company as if it were a propriety firm," SEBI said.
"The company's funds were routed to related parties and used for unconnected expenses, as if the company's funds were promoters' piggybank."
Anmol Singh Jaggi currently is the managing director at Gensol, while Puneet is a whole-time director. They hold about 39.6% stake in the company in total, as per exchange data.
Shares of Gensol have tanked about 75% since credit rating agencies downgraded their ratings, while the promoters have reduced their stake in the company by about 2.4%.
Meanwhile, BluSmart plans to pivot to operating as fleet partner of rival firm Uber, the Economic Times reported earlier this week, citing people briefed on developments.
