At the Bharat Mobility Expo 2025, Gensol Engineering (GEL) dazzled investors and industry watchers with two sleek electric vehicles (EVs), promising production within months. The company even announced 30,000 pre-orders, eliminating concerns that it is struggling with its EV business. But when NSE officials visited Gensol’s Pune facility in April, they found an eerie silence — just two-three workers in what was supposed to be a bustling EV factory.
Those 30,000 pre-orders, they were merely MoUs — non-binding agreements with no fixed pricing or delivery timelines. Sebi probe revealed Gensol had misled investors, regulators, and lenders by inflating its order book. This is one of the many instances when Gensol misled everyone — from credit rating agencies to its investors — as highlighted in the probe report published by the Sebi earlier this week. The regulator accused Anmol Jaggi and his brother Puneet — co-founders of Gensol — of misusing company funds. Sebi alleged money earmarked for Gensol’s EV business was diverted to purchase a luxury apartment, among other personal and family expenses.
Shares of the company plummeted another 5% on Thursday, hitting the lower circuit and plunging to a fresh 52-week low of `116.54. The stock has slid 90% from its all-time peak.
Writing on The Wall
Sebi’s report is not the first instance when questions regarding the finances of Gensol were raised. In early March, two credit rating agencies - Care Ratings and ICRA - downgraded Gensol’s ratings. Care Ratings downgraded long-term and short-term bank facilities from BB+ (Stable) to D and ICRA downgraded long and short term loan from BBB- (Stable) to D. The “D” rating stands for default status. The probe showed the first instance of default by Gensol on December 31, 2024, even as the company submitted statements to the CRAs certifying there was no delay or default in servicing any loans. Gensol had concealed facts regarding its debt servicing track record. Delays in servicing debt to Blusmart bondholders and a rise in share pledge to 85.5% highlight issues with financial flexibility.
The high leverage was a big concern. On March 13, the company said its debt stands at `1,146 crore against reserves of `589 crore, resulting in a high debt-equity ratio of 1.95.
Industry watchers said Gensol has been facing intense competition in the solar EPC sector and BluSmart was burning over `20 crore each month to keep its operations running. Gensol saw a slew of high-profile exits. Gensol CFO Ankit Jain resigned on March 6, indicating that all was not well with the company. After Sebi’s report, three independent directors have resigned.
Sebi’s whip
Acting swiftly on a complaint filed in June 2024, the Sebi barred the Jaggi brothers from securities markets till further orders. “The prima facie findings have shown misutilisation and diversion of funds 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,” said Sebi in the order signed by Ashwani Bhatia, whole-time director of Sebi.
Sebi has accused Gensol of misleading them, credit rating agencies, lenders and investors by submitting forged Conduct Letters. It stated that there is prima facie evidence of a blatant violation of rules of corporate governance. Sebi’s probe highlighted how the promoters used the company’s fund for personal expenses. The probe stated an alleged misuse of nearly `262 crore, which was a amjor part of the `978 crore loan from IREDA and PFC. The loan was meant to purchase 6,400 EVs for leasing to BluSmart. Only 4,704 EVs were
acquired. A part of these funds were used to purchase real estate, including an ultra-luxurious apartment in DLF Camellias. Other expenses included golf equipment, luxury items and credit card payments.
Industry expresses dismay
CEO of an EV company, requesting anonymity, said he was surprised by Sebi’s revelations. Jaggi brothers were building something great from India. BluSmart was perhaps the only ride hailing company which had a loyal customer base. Its abrupt closure is shocking for the industry. He said such incidents give a negative image to the country among global investors. Ace investor Vijay Kedia said Gensol is not the sole company that is riddled with such issues, there are many more hiding in the cupboard. While Kedia refrained from taking names, he hoped that by the time other scams come out it’s not too late.
Aman Gupta, co-founder and CMO of boAt and Sabeer Bhatia, co-founder of Hotmail spoke about the burning topic. Gupta described Gensol fraud as a “much-needed reality check” for the start-up ecosystem – founders, investors, employees and customers alike. He added that the incident has dented trust in the ecosystem and listed key takeaways for the founders.