On Tuesday, Anmol Singh Jaggi and Puneet Singh Jaggi, the driving forces behind Gensol Engineering Ltd, took a significant step back by resigning from their roles as directors and promoters. This decision followed a stern directive from the Securities and Exchange Board of India (SEBI), which barred them from participating in the securities market due to serious allegations of financial misconduct. An investigation uncovered that the Jaggi brothers misappropriated a staggering Rs 977.75 crore in loans intended for electric vehicle (EV) purchases, diverting funds for personal luxuries instead.
Allegations of Financial Misconduct
The interim order from SEBI, issued in response to a complaint filed in June 2024, revealed that the Jaggi brothers used company assets to indulge in extravagant purchases, including a lavish apartment in Gurgaon’s DLF Camellias and a golf set worth Rs 26 lakh. This misuse of funds has raised significant concerns regarding the integrity of Gensol Engineering and its leadership.
- Key findings from SEBI’s investigation include:
- Misappropriation of funds totaling Rs 977.75 crore.
- Personal purchases made with company money.
- Misleading communications to lenders and investors.
Independent Director Resigns Amid Concerns
In a notable turn of events, Arun Menon, the Independent Director of Gensol Engineering, submitted his resignation, citing long-standing concerns about the company’s financial health. In his letter to the board, Menon expressed that he had raised alarms about the growing debt situation as early as July-August 2024. Despite his attempts to engage with the Jaggi brothers for possible debt restructuring, he received inadequate responses.
Menon elaborated on his frustrations, noting:
"I had hoped to assist in restructuring our debt and reducing interest expenses but was met with silence."
He also mentioned that he initially planned to resign last year but agreed to stay on until the completion of a Matrix IPO, a related company. However, due to new commitments at a private equity firm, he can no longer fulfill his role at Gensol.
Gensol Shares Take a Hit
Following these revelations, Gensol Engineering’s stock experienced a sharp decline, dropping by 5% on Thursday. The shares plummeted to Rs 117.50 on the BSE and Rs 116.54 on the NSE, marking record lows for the company. This downward trend represents a staggering 90% drop from the peak of Rs 1,125.75 within the past year. In light of the ongoing investigations, SEBI has also mandated a halt to Gensol’s recently announced stock split.
- Notable stock performance details:
- Current price: Rs 117.50 (BSE) / Rs 116.54 (NSE).
- Nearly 90% drop from its 52-week high.
- SEBI’s restrictions following allegations of fund misappropriation.
Impact on BluSmart Electric Cabs
As a consequence of the unfolding scandal, BluSmart, the electric cab service co-founded by Anmol Jaggi, has reportedly ceased operations in major cities such as Delhi, Bengaluru, and Mumbai. This abrupt shutdown aligns with SEBI’s actions against the Jaggi brothers and their financial practices. According to reports, BluSmart may now consider partnering with Uber to redirect its fleet.
This situation continues to develop, and further updates are anticipated as investigations proceed.
For those keeping an eye on the electric vehicle market, the implications of this scandal could be far-reaching. Stay tuned for more insights and analysis on this ongoing story.
