 |
|
The Securities and Exchange Board of India (SEBI) has taken decisive action against Anmol Singh Jaggi and Puneet Singh Jaggi, the promoters of Gensol Engineering Limited (GEL) and BluSmart, barring them from holding any directorship positions in Gensol and prohibiting them from accessing the market. This interim order stems from SEBI's investigation into the alleged diversion of funds intended for the purchase of electric vehicles (EVs) for BluSmart, with a significant portion being used for personal expenses, including the acquisition of a luxury apartment in Gurgaon's prestigious DLF Camellias project. The case highlights a serious breach of corporate governance and a potential abuse of public trust, raising concerns about the oversight of publicly listed companies and the protection of investor interests. The details of the investigation paint a picture of calculated financial maneuvering designed to enrich the promoters at the expense of the company and its shareholders. This intricate web of transactions involved multiple entities, including related parties and real estate firms, making it difficult to trace the funds and uncover the true extent of the alleged misappropriation. The regulatory action against the Jaggi brothers sends a strong message that SEBI is committed to upholding the integrity of the financial markets and holding individuals accountable for fraudulent activities.
Gensol Engineering Limited secured term loans totaling Rs 978 crore from the Indian Renewable Energy Development Agency (IREDA) and Power Finance Corporation (PFC) between 2021 and 2024. Of this amount, Rs 664 crore was specifically earmarked for the acquisition of 6,400 electric vehicles intended for lease to BluSmart. In addition to the loan amount, Gensol was expected to contribute an additional 20 percent equity margin, bringing the total projected investment to approximately Rs 830 crore for the purchase of the EVs. However, discrepancies soon emerged regarding the actual number of EVs procured. An exchange filing released by the company in February 2025 revealed that only 4,704 EVs had been acquired to date. This was corroborated by Go-Auto, the EV supplier, which confirmed that Gensol had purchased 4,704 EVs for a total consideration of Rs 568 crore. SEBI's analysis uncovered a significant discrepancy of Rs 262.13 crore between the total expected deployment of Rs 830 crore and the actual EV consideration of Rs 568 crore. This substantial amount remained unaccounted for, even after a year had passed since the company availed the last tranche of financing. This unexplained difference immediately raised red flags and prompted further scrutiny into the company's financial transactions and accounting practices. The failure to adequately account for such a significant sum suggests a deliberate attempt to conceal the true destination of the funds and potentially mislead investors.
SEBI's investigation revealed a complex network of transactions designed to divert the funds from their intended purpose. According to SEBI's analysis, once the funds were transferred from Gensol to Go-Auto, purportedly for the purchase of EVs, they were often transferred back to the Company itself or routed to entities directly or indirectly related to Anmol Singh Jaggi and Puneet Singh Jaggi. This circular flow of funds suggests a deliberate attempt to obscure the origin and destination of the money. Some portions of these funds were allegedly used by the promoters for personal expenses, further compounding the impropriety. In one instance, after receiving a tranche of the loan from IREDA in 2022, Gensol allegedly diverted a major portion of the fund to Go-Auto, which then transferred the sum to Capbridge, a disclosed related party to Gensol. Capbridge then transferred Rs 42.94 crore to real-estate giant DLF. When SEBI contacted DLF for information, the real estate major revealed that the amount was paid for the purchase of an apartment in the uber-luxury project The Camellias in Gurgaon. This revelation confirmed SEBI's suspicions that funds intended for EV purchases were being used for personal enrichment.
SEBI's interim order specifically stated that "Funds availed by Gensol as loans for procuring EVs were, through layered transactions, partly utilized for buying a high-end apartment in The Camellias, Gurugram, in the name of a firm where the MD of Gensol and his brother are designated partners." This finding provides concrete evidence of the alleged misappropriation of funds and underscores the severity of the violations. The use of layered transactions further suggests a deliberate attempt to conceal the true destination of the funds and evade regulatory scrutiny. Another connected entity, Wellfray Solar Industries, was also implicated in SEBI's order. Wellfray was allegedly one of the recipients of the funds diverted by Gensol, which were supposed to be used to buy EVs for BluSmart. Notably, the Jaggi brothers held key directorial positions in Wellfray earlier. Bank statements cited by SEBI showed that Gensol paid Wellfray Rs 424.14 crore, out of which Rs 382.84 crore was transferred to various other entities. Rs 246.07 crore out of this was paid to related parties of Gensol, with Anmol Singh Jaggi being paid Rs 25.76 crore and Puneet Singh Jaggi being paid Rs 13.55 crore. This complex web of transactions involving related parties raises serious concerns about potential conflicts of interest and a lack of transparency in the company's financial dealings.
Furthermore, SEBI's analysis of the bank statements of Anmol Singh Jaggi revealed that the majority of funds were transferred to other related parties, family members, or utilized for personal expenses. Some notable payments made for personal use included: Rs 26 lakh to buy a golf set from TaylorMade, Rs 6.2 crore sent to his mother, Jasminder Kaur, Rs 2.99 crore to his wife, Mugdha Kaur Jaggi, Rs 1.86 crore to buy foreign currency, Rs 17.28 lakh to Titan Company for personal use, Rs 11.75 lakh to DLF Homes for personal use, and Rs 3 lakh to Make My Trip for personal use. These transactions provide further evidence that the promoters were allegedly using company funds for their own personal benefit. Bank statements of Puneet Singh Jaggi also showed similar diversions, further corroborating SEBI's findings. These alleged diversions represent a blatant disregard for corporate governance norms and a potential breach of fiduciary duty to the company's shareholders.
SEBI's order noted, "What has been witnessed in the present matter is a complete breakdown of internal controls and corporate governance norms in Gensol, a listed company. The promoters were running a listed public company as if it were a propriety firm. The Company’s funds were routed to related parties and used for unconnected expenses, as if the Company’s funds were promoters' piggybank." The order further noted, "The result of these transactions would mean that the diversions mentioned above would, at some time, need to be written off from the Company’s books, ultimately resulting in losses to the investors of the Company." This scathing assessment highlights the severity of the alleged violations and the potential consequences for the company and its shareholders. The complete breakdown of internal controls and corporate governance norms raises serious concerns about the company's management and oversight. The allegation that the promoters were running the company as if it were a personal piggy bank suggests a deliberate and calculated attempt to defraud investors and enrich themselves at the expense of the company. The potential write-offs and losses to investors could have significant financial repercussions for the company and its shareholders.
The immediate market reaction to SEBI's order was swift and negative. Gensol Engineering shares crashed 5 percent, remaining locked in the lower circuit at Rs 122.68 apiece. This sharp decline in share price reflects the loss of investor confidence in the company and the potential financial impact of the alleged violations. The Gensol and BluSmart case serves as a cautionary tale about the importance of corporate governance and regulatory oversight. The alleged diversion of funds and the potential misuse of company resources highlight the need for greater transparency and accountability in publicly listed companies. SEBI's decisive action against the Jaggi brothers sends a strong message that regulatory bodies are committed to protecting investor interests and upholding the integrity of the financial markets. Further investigations and legal proceedings are likely to follow, and the outcome of these proceedings will have significant implications for the future of Gensol Engineering and the individuals involved. This case also underscores the importance of due diligence and risk management for investors. Investors should carefully scrutinize a company's financial statements, governance practices, and related-party transactions before making investment decisions. The Gensol and BluSmart saga serves as a stark reminder that even seemingly successful companies can be vulnerable to fraud and mismanagement.
Source: Gensol and BluSmart promoter Anmol Singh Jaggi diverted EV loans to purchase a DLF Camellias flat