SEBI Cracks Down on Gensol Engineering: Promoters Barred Over Fund Diversion Allegations

The Securities and Exchange Board of India (SEBI) has issued an interim order prohibiting Gensol Engineering Ltd (GEL) and its promoters, Anmol Singh Jaggi and Puneet Singh Jaggi, from participating in the securities markets with immediate effect.

This action comes in response to serious allegations involving financial misconduct, including diversion of funds intended for purchasing electric vehicles and lapses in corporate governance, according to Business Today.

In addition, SEBI has directed GEL to halt the stock split it had previously announced.

According to the SEBI order, promoters Anmol and Puneet Singh Jaggi diverted company loans for personal purposes, including acquiring luxury real estate in Gurgaon.

Company Funds Misused as Personal Capital

SEBI found that the promoters were treating GEL, a listed public company, as their personal property. Company funds were transferred to related parties and used for unrelated expenditures, indicating misuse of corporate resources.

In a detailed 29-page interim order, SEBI stated, “The prima facie findings have shown mis-utilisation and diversion of funds of the company (GEL) in a fraudulent manner by its promoter directors, Anmol Singh Jaggi and Puneet Singh Jaggi, who are also the direct beneficiaries of the diverted funds.”

One major finding revealed that ₹42.94 crore from a larger loan was routed through Capbridge Ventures, a firm controlled by Anmol Singh Jaggi, to finance a luxury apartment purchase at DLF Camellias.

Lavish Personal Expenditures from Company Loans

Further misuse of company funds included an investment of ₹50 lakh into Ashneer Grover’s startup, Third Unicorn. Additionally, ₹6.20 crore was diverted to Anmol Singh Jaggi’s mother, and ₹2.98 crore to his wife.

Personal expenses included ₹26 lakh on a golf set and ₹3 lakh spent on travel through MakeMyTrip.

These unauthorized financial diversions would eventually have to be written off from Gensol’s accounts, resulting in investor losses.

SEBI’s whole-time member Ashwani Bhatia noted, “…prima facie evidence of a blatant violation of rules of corporate governance is writ large over the workings of the company. The diversion of funds of the company (GEL) by promoter entities reflects a culture of weak internal control, where even ring-fenced borrowings from institutional creditors were rerouted at the total discretion of the promoters.”

Fake Documentation Submitted to Lenders

According to SEBI, the promoters also submitted false documents to the Indian Renewable Energy Development Agency (IREDA) and Power Finance Corporation (PFC) to conceal loan defaults.

These findings emerged from a detailed investigation following a complaint received in June 2024, which raised concerns about potential share price manipulation and fund diversion.

As the investigation progressed, SEBI uncovered deeper irregularities involving loan records and financial management.

Credit Ratings Downgraded After Loan Defaults

In March 2025, credit rating agencies CARE Ratings and ICRA downgraded Gensol’s rating to “D,” which indicates a company is delaying loan repayments.

ICRA cited feedback from lenders suggesting delayed payments, although Gensol claimed publicly that it had sufficient funds to meet its obligations.

On March 5, 2024, Gensol issued an investor update through the stock exchange, signed by CEO Anmol Singh Jaggi, denying any involvement in the “falsification claims” raised by the rating agencies.

Lenders Deny Issuing Submitted Documents

When credit rating agencies requested term loan statements from all lenders, Gensol provided records from most except IREDA and PFC. Instead, it submitted what it called “Conduct Letters” and “No Objection Certificates.”

These claimed timely loan servicing and were meant to justify a withdrawal of credit ratings.

ICRA, as noted in the SEBI order, stated, “Certain documents shared by GEL with ICRA, on its debt servicing track record, were apparently falsified, which raises concerns on its corporate governance practices, including its liquidity position.”

Upon verification, IREDA and PFC confirmed that they had not issued the documents submitted by Gensol. This confirmed the documents were fake.

EV Fund Use Discrepancies Uncovered

SEBI then obtained detailed records from IREDA and PFC regarding Gensol’s loans. It was revealed that the company had failed to repay several loan installments on time.

Additionally, SEBI found irregularities in how Gensol used its loans. The company had secured term loans worth ₹977.75 crore from IREDA and PFC. Out of this, ₹663.89 crore was specifically allotted for purchasing 6,400 electric vehicles to lease to BluSmart, a related entity.

However, in a letter dated February 14, 2025, Gensol admitted to having purchased only 4,704 EVs. This was confirmed by Go-Auto Private Limited, the supplier, which reported sales of 4,704 EVs worth ₹567.73 crore.

₹262.13 Crore Remains Unaccounted For

Based on the funding structure, Gensol was expected to add a 20% margin to the borrowed amount, making the total expected investment ₹829.86 crore.

With only ₹567.73 crore actually spent on EV purchases, a gap of ₹262.13 crore remains unexplained.

This discrepancy is now central to SEBI’s investigation into how the remaining funds were misappropriated.