Gensol Electric Vehicles Shuts Down Operations Amid Financial Scandal
Gensol Electric Vehicles Private Limited, a subsidiary of Gensol Engineering focused on producing two-seater electric vehicles, is set to cease operations by April 30. The decision follows a series of layoffs, with the company recently letting go of its remaining 100 employees. This drastic move comes shortly after the termination of about 50 staff members earlier this month, signaling significant turmoil within the organization.
CEO’s Announcement of Closure
During a call with the remaining employees, CEO Pratik Rajendrakumar Gupta broke the news of the impending shutdown. The lack of communication from Gensol regarding this development has left many questions unanswered.
Investigation and Allegations of Fraud
The closure is closely linked to a serious investigation by the Securities and Exchange Board of India (SEBI), which issued a troubling interim order on April 16. This order highlighted allegations of systemic fraud and fund misappropriation involving the Jaggi brothers. SEBI’s inquiry revealed that Gensol had acquired Rs 663.89 crore in loans from the Indian Renewable Energy Development Agency (IREDA) and Power Finance Corporation (PFC) to procure 6,400 electric vehicles. Shockingly, only 4,704 EVs, valued at Rs 567.73 crore, were delivered, leaving a significant Rs 262.13 crore unaccounted for through complex transactions allegedly benefiting the Jaggi brothers.
- Key Findings from SEBI’s Investigation:
- Loans Acquired: Rs 663.89 crore
- Vehicles Delivered: 4,704 out of 6,400
- Missing Funds: Rs 262.13 crore
Misleading Pre-Orders and Lack of Manufacturing Activity
Gensol EV had ambitious plans to launch its two-seater electric vehicle, the EZIO, and a cargo model, the EZIBOT, claiming to have secured 30,000 pre-orders. However, SEBI later categorized these pre-orders as dubious, revealing they were merely Memorandum of Understandings (MOUs) with various entities for 29,000 vehicles without any details on pricing or delivery timelines.
An audit conducted by an NSE representative on April 9 at Gensol’s facility in Chakan, Pune, uncovered a lack of manufacturing activity, with only a handful of laborers present. The examination of electricity bills showed a maximum monthly consumption of just Rs 1.57 lakh in December 2024, indicating minimal operational activity.
Internal Insights Reveal Production Limits
Insider accounts suggest that the company had only produced 10 electric vehicles, primarily for testing. This stark contrast between the company’s ambitious claims and the actual output has raised red flags among regulators and investors alike.
The Broader Impact and Related Entities
Other entities linked to Gensol, such as Gensol EV Lease Private Limited and Gensol Consultant Private Limited, were also implicated in the alleged financial misconduct. The investigation has cast a shadow over the entire Gensol Group, revealing a complex web of subsidiaries involved in suspicious fund transfers.
As Gensol Electric Vehicles prepares to wind down, the fallout from this scandal serves as a cautionary tale for investors and industry stakeholders regarding the importance of transparency and accountability in the electric vehicle sector.
