The Securities and Exchange Board of India (SEBI) has taken significant action against Gensol Engineering, accusing the company of misleading investors and misappropriating funds, particularly regarding its electric vehicle (EV) manufacturing claims. In an interim order dated April 15, SEBI pointed out severe deficiencies in the company’s financial disclosures and the conduct of its promoters, Anmol Singh Jaggi and Puneet Singh Jaggi.
SEBI’s Findings on Gensol Engineering
A recent unannounced investigation by the National Stock Exchange (NSE) on April 9 at Gensol’s EV facility in Chakan, Pune, uncovered a startling lack of activity. Observers noted that only two to three workers were present, and the electricity usage over the past year was minimal, casting doubt on the company’s operational claims.
- Key Observations:
- Minimal workforce at the EV plant.
- Low electricity consumption over the year.
In a stock exchange notice from January 28, Gensol claimed to have received pre-orders for 30,000 electric vehicles showcased during the Bharat Mobility Global Expo 2025. However, SEBI’s investigation revealed that these were non-binding memorandums of understanding (MoUs) with nine companies, missing essential details such as pricing and timelines.
Questionable Partnerships and Financial Discrepancies
Further scrutiny highlighted discrepancies in Gensol’s announcement of a strategic alliance with Refex Green Mobility Ltd on January 16, which involved the transfer of 2,997 EVs and a loan of Rs 315 crore. This agreement was later canceled in March, raising further questions about the company’s integrity.
Another alarming claim came from a February 25 announcement regarding a Rs 350 crore deal tied to the sale of Gensol’s U.S. subsidiary, Scorpius Trackers Inc, which was only established in July 2024. Gensol failed to provide any justification for the valuation when queried.
Financial Irregularities and Consequences
SEBI’s investigation also revealed that Gensol had obtained Rs 977.75 crore in loans from IREDA and PFC between FY22 and FY24, with Rs 663.89 crore allocated for purchasing 6,400 EVs. Yet, only 4,704 vehicles were actually acquired, resulting in a Rs 262.13 crore discrepancy. SEBI suspects that the Jaggi brothers diverted these funds for personal expenses, including the purchase of luxury real estate and support for family-connected businesses.
- Financial Overview:
- Total loans secured: Rs 977.75 crore
- Allocated for EVs: Rs 663.89 crore
- Actual EVs procured: 4,704
- Funds unaccounted for: Rs 262.13 crore
In light of these findings, SEBI has prohibited the Jaggi brothers from holding any managerial or directorial positions in Gensol and barred them from participating in the securities market. Additionally, the company has been instructed to halt its proposed 1:10 stock split.
Following SEBI’s decisive actions, the Jaggi brothers have resigned from their positions as directors in Gensol Engineering, marking a significant turn in the company’s governance.
This unfolding situation serves as a cautionary tale about the importance of transparency and ethical conduct in the rapidly evolving EV sector. For more insights into corporate governance and financial regulations, check out our related articles here.
