Gensol engineering, a major participant in India’s clean-tech revolution, is now subject to regulatory investigation for financial irregularities and misconduct.
The Securities and Exchange Board of India (SEBI) has stopped its promoters – Anmol Singh Jaggi and Puneet Singh Jaggi – from the securities market. The action follows the allegations that the pair used funds for electric vehicle (EV) projects, used them for luxury purchases and presented fake documents to cover the loan omission.
Following SEBI’s order, Gensol’s stock fell to 5 percent, already a decline in the last one year.
Rise and fall of Gensol Engineering
Established by Jaggi Brothers, Gensol started as a solar engineering firm and expanded into EV space. It was listed on the BSE SME platform in 2019 and transferred to the main board by 2023. It also supported an electric cab service Bluusmart co-established by Anmol Singh Jaggi by supplying EVS through lease.
While the company showed promise in its early days, things went down fast. The market price of Gensol declined from Rs 4,300 crore to Rs 506 crore in just one year. The stock fell by about 85 percent, hurting thousands of retail investors.
Blame
The problem began with a loan of Rs 978 crore taken from two government -backed institutions – Renewable Energy Development Agency (IREDA) and Power Finance Corporation (PFC). This money was to fund the purchase of 6,400 EVs to lease the blusmart.
However, SEBI found that Gensol acquired only 4,704 vehicles. This gave up a shortage of Rs 262 crore – which SEBI believes was diverted for personal use.
Jaggi Brothers allegedly used funds to buy a luxury residential complex in Gurgaon, a high -end apartment at Camelias. Other expenses allegedly included international travel, golf equipment, luxury items, credit card bills and transfer to family members.
How to misuse funds
SEBI investigation revealed how the money was incorrectly placed through a series of transactions:
- A loan of Rs 71.41 crore to Rs 50 crore was rooted through a promoter-controlled unit, Capbridge Ventures, in which Rs 42.94 crore was used to buy a luxury apartment.
- Another 40 crore rupees from a separate loan were transferred to Velre Solar Industries, a company associated with the promoters.
- The fund was also transferred to other connected businesses and individuals, including Rs 29.5 crore to Gensol, and Rs 5.6 crore for matrix gas and renewal.
- Money was reshuffled between respective firms such as Jensol EV Lease, Gosolar Ventures and Blasmart Mobility to hide the actual mark of diverted money.
Fake documents and loan omission
Another serious allegation is that Jensol presented a fake “Conduct letter” to IREDA and PFC, claiming that its loans were regular. When SEBI reached the lenders, the two confirmed that they have not issued any such letter.
Subsequently, credit rating agencies ICRA and Care ratings downed gensol in “D” ratings in March, suggesting default risk and poor repayment capacity.
outcome
After the interim order of SEBI:
- Jaggi brothers have been banned from reaching the securities market or playing a major role in listed companies.
- Gensol’s planned stock split has been suspended.
- A forensic audit has been ordered to excavate the company’s financial books deeply.
- The investor’s confidence has taken a large -scale hit, and the company’s credibility is under severe doubt.
