SEBI cracks down on Gensol Engineering; promoters barred amid alleged Rs.262 crore fund diversion

SEBI issues stern interim order against BluSmart-linked Gensol promoters

In a significant regulatory action, the Securities and Exchange Board of India (SEBI) has issued an interim order on April 15, 2025, barring Anmol Singh Jaggi and Puneet Singh Jaggi, promoters of Gensol Engineering Ltd. (GEL), from holding any directorial positions in listed companies and from accessing the securities market. The order comes in the wake of allegations that the Jaggi brothers diverted approximately Rs.262 crore, intended for electric vehicle (EV) procurement, towards personal expenditures and unrelated entities.

Fund misuse

Between 2021 and 2024, Gensol Engineering secured loans totaling Rs.978 crore from the Indian Renewable Energy Development Agency (IREDA) and the Power Finance Corporation (PFC), earmarked for the acquisition of 6,400 EVs to be leased to BluSmart, an EV ride-hailing service also promoted by the Jaggi brothers. However, only 4,704 EVs were reportedly procured, leaving a discrepancy of 1,696 vehicles. Investigations revealed that Rs.262 crore of the loan amount was unaccounted for and allegedly diverted for personal use.

Lavish personal expenditures

SEBI’s probe uncovered that funds were channeled through a network of related entities to finance personal luxuries. Notably, Rs.42.94 crore was utilized to purchase a luxury apartment in DLF’s The Camellias in Gurugram, registered under a firm where both Anmol and Puneet Singh Jaggi are designated partners. Additional expenditures included Rs.26 lakh on high-end golf equipment and substantial transfers to family members.

Regulatory actions and market impact

In response to these findings, SEBI has:​

• Barred the Jaggi brothers from holding directorial or key managerial positions in any listed company.​
• Prohibited them from participating in the securities market until further notice.​
• Suspended Gensol Engineering’s proposed 1:10 stock split.​
• Initiated a forensic audit of Gensol and its associated entities.

Following the announcement, Gensol’s shares plummeted 5% on the National Stock Exchange, hitting the lower circuit limit at Rs.122.68. The stock has witnessed a significant decline of approximately 84% since the beginning of 2025.

BluSmart’s operational challenges

The controversy has also impacted BluSmart, which has reportedly halted ride bookings in the National Capital Region and Bengaluru. The company is considering transitioning to a fleet partnership model with Uber amid financial constraints. Additionally, BluSmart has delayed salary payments for March, citing cash flow issues.

Jaggi brothers step down

In light of the audit to be conducted by SEBI, Gensol Engineering said it will fully cooperate with the process. The promoter brothers have now stepped down as the company’s directors following the market regulator’s orders. They are no longer participating in the management of the company as per SEBI’s instructions.

Conclusion

SEBI’s interim order underscores the importance of corporate governance and accountability in listed companies. As investigations continue, the actions taken serve as a cautionary tale for corporate promoters regarding the misuse of funds and the potential repercussions of regulatory non-compliance.

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