Power Finance Corporation (PFC) and Indian Renewable Energy Development Agency (IREDA) are reportedly exploring legal avenues to protect their substantial loan exposures to Gensol Engineering Ltd., following recent allegations of financial mismanagement and fund diversion by the company.
Gensol Engineering had secured loans totaling approximately ₹978 crore from PFC and IREDA, primarily intended for the procurement of electric vehicles (EVs) to be leased to BluSmart, an EV ride-hailing service also promoted by Gensol’s founders.
However, investigations by the Securities and Exchange Board of India (SEBI) revealed that only a portion of these funds was utilized for the stated purpose.
SEBI’s interim order highlighted that over ₹200 crore was allegedly diverted through a car dealer and cycled back to entities linked to the promoters, with some funds used for unrelated personal expenses, including luxury real estate acquisitions.
Further compounding the issue, credit rating agency ICRA accused Gensol of submitting falsified documents to misrepresent its debt servicing status.
This revelation led to a downgrade in Gensol’s credit rating and a significant decline in its stock value, which has plummeted by approximately 75% since the downgrades.
In response to these developments, SEBI has barred Gensol’s promoters, Anmol Singh Jaggi and Puneet Singh Jaggi, from holding key positions in the company and participating in the securities market until further notice.
The regulator also halted a proposed 1:10 stock split and criticized the company’s governance practices, stating that the promoters were operating the listed entity as if it were a proprietary firm.
Given the severity of the allegations and the potential financial implications, PFC and IREDA are considering initiating legal proceedings to recover the outstanding dues and mitigate further risks associated with their exposure to Gensol.
The outcome of these actions could set a precedent for how financial institutions handle similar cases of corporate misconduct in the future.
