In a shocking turn of events, Gensol Engineering, once celebrated as a promising clean energy and electric vehicle solutions provider, has now found itself at the center of a serious corporate scandal. The Securities and Exchange Board of India (SEBI) has cracked down on the company, uncovering a wide-ranging web of fund diversions, false disclosures, and blatant corporate governance violations that paint a grim picture for investors.
The saga began unraveling when SEBI discovered that Gensol had submitted fabricated documents to credit rating agencies regarding its debt servicing with two of its key lenders — Indian Renewable Energy Development Agency (IREDA) and Power Finance Corporation (PFC). Contrary to the company's claims, SEBI confirmed that no such debt servicing confirmation letters were ever issued by the lenders. This shocking revelation exposed Gensol’s false declarations of having no defaults, when in fact, the company was actively defaulting on its financial commitments.
Further investigation highlighted the alarming transition of BlueSmart — a company closely associated with Gensol — into an asset-light business model, largely achieved because its vehicle debt was actually funded by Gensol, the listed entity, and not borne independently as was portrayed.
SEBI's probe revealed a series of fund diversions that have rocked investor confidence. The first instance involved Gensol taking loans exceeding Rs 660 crore from lenders, supposedly for acquiring vehicles worth Rs 830 crore, including the required 20% margin money. However, Gensol failed to account for the margin money and in reality, vehicles were purchased for just Rs 567 crore. Nearly Rs 100 crore of the loaned funds were instead siphoned off by the promoters to purchase luxury DLF flats at the posh Camellias project in Gurugram. The modus operandi was simple but deceitful: Gensol transferred money from its loan accounts to EV sellers, who on the same day redirected the funds to related parties and promoter-linked entities for personal acquisitions.
The second layer of fraud involved Gensol paying advance booking amounts to DLF for promoter-owned flats. These amounts, which should have reverted to the company, were never returned and were eventually funneled into the hands of the promoters.
A third significant fund diversion was uncovered when Gensol took loans from IREDA under the pretext of purchasing electric vehicles but instead transferred the funds to Go Auto, which further routed the money to Matrix Gas (another promoter-linked venture), back to Gensol itself, to private companies, and even to a stockbroker, Sharekhan. The funds were also allegedly used for stock market trading and to finance the margin money for other ventures run by the promoters.
Adding to this, another Rs 100 crore in loans obtained by the listed entity were found to have been directly diverted to the promoters’ personal pockets. The extent of manipulation was so deep that even after Gensol had overpaid Go Auto by Rs 200 crore for EV purchases, the company still reported outstanding payables of Rs 50 crore. This points to an eye-popping Rs 250 crore being misused under the garb of vehicle procurement.
Further deepening the controversy, SEBI uncovered how Anmol Singh Jaggi, one of the key promoters, misused company funds for highly questionable personal transactions. This included a transfer of ₹6 crore to his mother, ₹3 crore to his wife, the purchase of Dirham worth ₹1.86 crore, a ₹26 lakh spend on a golf set, and even a ₹50 lakh investment in Ashneer Grover’s startup Third Unicorn, which has since shut down. These revelations paint a clear picture of the promoters treating public money as their personal bank account.
Perhaps the most bizarre discovery was that Gensol raised debit notes for interest payable on Go Auto, only to find that part of the diverted money was used by the promoters to buy luxury items such as golf sets — an insult to shareholders’ trust.
SEBI summed up the situation in harsh terms, concluding that “it prima-facie appears that the Company grossly misutilized funds and also diverted certain funds to the promoter/promoter-related entities.” The regulator further highlighted how even preferential allotments where promoters participated were, in reality, funded using the company’s own money, raising serious questions about the integrity of capital raising efforts at Gensol.
In addition, trading in Gensol shares by promoter-linked entity Wellrayt Solar was also discovered to have been financed using Gensol’s own funds — a classic case of self-dealing and deception.
Beyond fund diversion, the company also faces severe disclosure lapses, including misleading Memorandums of Understanding (MOUs), false claims about car manufacturing which seemingly never existed, a failed transaction involving Refex, and the mysterious sale of its U.S. subsidiary, which was incorporated only in 2024, for a whopping Rs 350 crore — a valuation that remains largely unexplained.
Adding to the woes, Gensol’s promoter holding has dramatically crashed from 65% to nearly negligible levels, primarily because of forced selling triggered by lenders invoking pledges, once again leaving retail investors blindsided.
This case is fast turning into a textbook example of how promoters enjoy personal gains while leaving investors clutching at straws — "the promoter has cash, and the investor has vision," as market watchers sarcastically put it.
SEBI’s action plan against Gensol is firm and clear: the regulator has banned the promoters from trading in the company’s stock and from holding any key managerial positions. Additionally, SEBI has put a halt to the company's proposed stock split and mandated the appointment of a forensic auditor to uncover the full extent of financial mismanagement.
As this investigation unfolds, Gensol Engineering now stands as yet another cautionary tale for investors, underlining the age-old investment principle — trust, but verify.
The real hit, however, has been felt by the shareholders. Gensol Engineering’s stock has already plummeted over 85% in just the last one month and is now down more than 95% from its all-time high, leaving investors staring at staggering losses.
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