SEBI bars Gensol founders over EV loan diversion

India's securities regulator has cracked down on Gensol Engineering Ltd over alleged financial misconduct involving loans for electric vehicles. In an interim order, the Securities and Exchange Board of India (SEBI) barred Gensol's co-founders, Anmol Singh Jaggi and Puneet Singh Jaggi, from serving as directors or key managerial personnel and restrained them from buying or selling securities. The regulatory action follows a probe into complaints of stock price manipulation and loan defaults. The order also directed Gensol to suspend its 1:10 stock split, which had been announced.

SEBI's investigation uncovered a large-scale diversion of funds meant for Gensol's EV leasing business. The company had availed about Rs 977.75 crore in loans from state-run lenders IREDA and PFC to fund 6,400 electric vehicles for its affiliate, BluSmart Mobility. However, Gensol procured only 4,704 EVs (about Rs 567.7 crore worth), leaving roughly Rs 262 crore of the loan amount unaccounted.

According to SEBI, much of the missing money was siphoned off through related entities. Funds paid to Gensol's EV supplier were largely routed back to companies linked to the Jaggi brothers. Some diverted funds went towards unrelated uses - for instance, around Rs 50 crore was spent on a luxury apartment in DLF's Camellias project. Investigators also found about Rs 0.5 crore transferred to a broker and used to trade Gensol's shares, suggesting attempts to manipulate the stock price.

The interim order flags severe governance lapses at Gensol. The company began defaulting on its loan repayments in late 2024. Still, it concealed these failures by forging lender letters to credit rating agencies that falsely affirmed timely repayments. SEBI noted a "complete breakdown of internal controls" at Gensol, stating that the promoters effectively treated the listed company's funds as their personal "piggybank"

Gensol's turmoil has spilled over to BluSmart, the electric taxi startup it backs. BluSmart - founded by the Jaggi brothers - relies on Gensol's EV fleet and financing. BluSmart's strains became evident when it defaulted on payments in February 2025, prompting Gensol's creditors and rating agencies to raise alarms. Facing a cash crunch and heavy losses, BluSmart has since shut down its independent ride-hailing service and pivoted to a fleet-partner model with Uber. In recent weeks, BluSmart's daily ride volumes fell to less than half last year's peak, and several senior executives resigned amid the turmoil.

Investors have reacted sharply to the revelations. Gensol's stock has plunged about 75-80 per cent from its peak. The share hit a 5 per cent lower circuit around Rs 123 after SEBI's order was disclosed. SEBI has also ordered a forensic audit of Gensol's accounts, underscoring that these measures aim to safeguard investors while the investigation continues.