Sebi Finds No EV Activity at Gensol’s Pune Plant, Rs 262 Cr Misused: How Were Funds Misused?

Markets regulator, Securities and Exchange Board of India (Sebi), found "no manufacturing activity" at Gensol Engineering's electric vehicle (EV) plant in Pune, with only 2-3 labourers present during a site visit by a National Stock Exchange (NSE) official.

These revelations were part of markets regulator Sebi's interim order issued on April 15, issued in response to a complaint received in June 2024 alleging manipulation of Gensol's share price and misappropriation of funds.

According to PTI, Sebi's order cited discrepancies as well as misleading disclosures to investors by Gensol Engineering, a company promoted by brothers Anmol Singh Jaggi and Puneet Singh Jaggi.

The investigation conducted by the NSE revealed a lack of manufacturing activity at Gensol's EV plant — Gensol Electric Vehicle Private Ltd — at Chakan in Pune. During the inspection on April 9, an NSE official found only 2-3 labourers present.

"It was found that there was no manufacturing activity at the plant with only 2-3 labourers present there. The NSE official called for details of electricity bills of the unit and it was observed that the maximum amount billed by Mahavitaran during the last 12 months was Rs 1,57,037.01 for December 2024,” Sebi stated in its interim order passed on April 15.

"Hence, it can be inferred that there has been no manufacturing activity at the plant site which is on a leased property," Sebi concluded.

Misleading Disclosures and Funds Diversion

The site visit followed an announcement by Gensol to the stock exchanges on January 28, 2025, claiming it had received pre-orders for 30,000 units of its newly launched EVs, showcased at the Bharat Mobility Global Expo 2025. However, Sebi found that the orders were Memorandum of Understandings (MoUs) entered with nine entities for 29,000 cars.

These MoUs were in the nature of an expression of willingness with no details regarding price of the vehicle or their delivery timelines. Therefore, it appeared that the company was making misleading disclosures to investors, Sebi stated.

In another disclosure on January 16, 2025, Gensol informed the exchanges about a strategic tie-up with Refex Green Mobility Ltd "for the transfer of 2,997 electric four-wheelers" to Refex. As a part of the tie-up, Refex was supposed to assume Gensol's existing loan of Rs 315 crore. However, the proposed takeover by Refex was withdrawn later, as stated in a March 28 disclosure.

Additionally, on February 25, 2025, Gensol announced the signing of a non-binding term sheet for Rs 350 crore for a strategic transaction involving the sale of Gensol's US subsidiary, Scorpius Trackers Inc. Sebi noted that the US subsidiary was incorporated on July 22, 2024. Gensol failed to submit any explanation or rationale, when probed by Sebi regarding the basis of such valuation of Rs 350 crore.

These disclosures were uncovered in a Sebi probe, which prima facie, indicated "mis-utilisation and diversion of funds of the company 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.

Gensol secured Rs 977.75 crore in loans from IREDA and PFC between FY22 and FY24. Of the loan, Rs 663.89 crore was meant for purchasing 6,400 EVs. However, the company admitted to acquiring only 4,704 EVs, worth Rs 567.73 crore, as confirmed by supplier Go-Auto.

Given that Gensol was also required to provide 20% equity contribution, the total expected outlay was Rs 829.86 crore, leaving Rs 262.13 crore unaccounted for. Sebi’s probe found that funds meant for EV purchases were routed back to Gensol or entities linked to Jaggi brothers. Some of the funds were allegedly used for meeting personal expenses, such as the purchase of a luxury apartment, transfers to close relatives and investments benefiting promoter-linked private entities.

Regulatory Action

In response to these governance lapses, Sebi took several stringent measures. The regulator prohibited Gensol and its promoters, Jaggi brothers-from accessing the securities market until further notice. Sebi also barred the Jaggi brothers from holding any directorship or key management position in Gensol.

Additionally, Sebi directed Gensol Engineering to halt its 1:10 tock split. Following the order, the brothers stepped down as the directors of the company.

(With inputs from PTI.)