Power Finance Corporation Ltd (PFC), a state-owned Non-Banking Financial Corporation (NBFC), has taken decisive action by lodging a complaint with the Economic Offences Wing (EoW) of the Delhi police against Gensol Engineering Ltd. This move comes amid allegations that Gensol submitted falsified documents, as reported by Moneycontrol. PFC emphasized its dedication to protecting its interests and ensuring loan recovery while maintaining transparency in its operations.

Internal Investigations Underway

PFC has initiated an internal review under its “anti-fraud policy” to thoroughly examine the situation. The corporation clarified that it has not issued any correspondence to credit rating agencies such as CARE Ratings and ICRA regarding this matter.

Credit Ratings Downgraded

In March 2023, both CARE Ratings and ICRA downgraded Gensol’s credit ratings to “D,” indicating that the company is in default due to delays in loan repayments. This downgrade reflects serious concerns regarding Gensol’s financial health and repayment capabilities.

• Gensol’s Affiliations: The company operates BluSmart, an electric vehicle (EV) service provider.
• Allegations of Deception: Gensol is accused of fabricating letters from lenders, including PFC and the Indian Renewable Energy Development Agency Ltd (IREDA), to falsely portray a status of timely debt servicing. The treachery was exposed when credit rating agencies began verifying these letters with the lenders.

Multiple Investigations Launched

The complaint by PFC has triggered a fourth simultaneous investigation against Gensol and BluSmart. Additionally, Gensol is under scrutiny from the Securities and Exchange Board of India (SEBI) and the Ministry of Corporate Affairs. There are indications that the Enforcement Directorate (ED) may also investigate the company for suspected money laundering activities.

Loan Details and Utilization Issues

In January 2023, PFC approved a substantial loan of Rs 633 crore to Gensol as part of government initiatives promoting electric vehicle adoption under programs like FAME and PM E-bus Seva. The loan was designated for acquiring 6,000 EVs:

• Rs 587 crore for 5,000 electric four-wheelers to be leased to BluSmart Mobility’s ride-hailing service.
• Rs 46 crore was allocated for 1,000 electric three-wheelers intended for cargo purposes, but this part of the loan was never utilized.

PFC disbursed Rs 352 crore of the approved amount for leasing 3,000 EVs to BluSmart Mobility, with 2,741 vehicles confirmed delivered and hypothecated to PFC as verified by third-party agencies.

Recovery Efforts and Financial Safeguards

PFC is actively exploring various strategies to recover the outstanding principal of Rs 307 crore from Gensol Engineering Ltd. While Gensol had consistently serviced its dues until January 31, 2025, it faced challenges in the fourth quarter of FY25, prompting PFC to invoke the Debt Service Reserve Account (DSRA) to settle dues for February and March 2025.

To secure its interests, PFC has taken additional measures, including pledging Gensol’s equity shares and Non-Convertible Debentures (NCDs), along with a corporate guarantee from Gensol Ventures Private Limited and personal guarantees from the promoters. Liquid assets such as TRA balances, DRA balances, and a fixed deposit by BluSmart, marked with a lien for PFC, are also in place to safeguard the loan repayment process.

As the situation continues to develop, PFC remains committed to ensuring transparency and accountability in its operations while seeking to protect its financial investments.