New Delhi: Public sector financiers Power Finance Corporation (PFC) and Indian Renewable Energy Development Agency (IREDA) are exploring legal options to protect their combined loan exposure of ₹977 crore to Gensol Engineering, following serious allegations of fund diversion and forgery against the company’s promoters.
According to sources familiar with the matter, the move comes after the Securities and Exchange Board of India (SEBI), in an order issued on April 15, accused Gensol promoters Anmol Singh Jaggi and Puneet Singh Jaggi of diverting funds meant for electric vehicle procurement and of forging repayment letters provided to credit rating agencies.
Of the total loan, ₹663 crore was earmarked for the purchase of electric vehicles, which were then leased to BluSmart, an all-electric ride-hailing service promoted by the Jaggi brothers and backed by prominent investors like BP Ventures. As many as 5,500 electric vehicles have been leased to BluSmart under this arrangement. Notably, BluSmart’s service went offline on Thursday amid the controversy.
The SEBI order also revealed that Gensol allegedly submitted forged documents to rating agencies to portray timely loan repayments to PFC and IREDA. The two institutions have since issued show-cause notices to Gensol seeking an explanation on how such letters were submitted in their name.
If the allegations of fraud are substantiated through a forensic audit, the loans may be classified as fraudulent, which would necessitate 100% provisioning by the lenders. As per estimates, this could mean provisioning of approximately ₹625 crore by IREDA and ₹353 crore by PFC.
SEBI’s findings indicate that ₹262 crore remains unaccounted for and was allegedly used for personal luxuries, including a luxury apartment and a golf set. Both Anmol and Puneet Jaggi have been barred from holding management roles in any listed company.
Commenting on the situation, Asutosh Mishra, Head of Research at Ashika Stock Broking, said: “There is clearly a fund diversion. Whether we can technically call it a fraud is the question. Provisioning will have to be done, but the extent depends on the loan structure.”
Although the loans are secured against the electric vehicles, there are concerns about their valuation and recoverability.
Gensol, PFC, IREDA, and the credit rating agencies CARE and ICRA — both of which downgraded Gensol’s rating to ‘D’ (default) in March — have not issued statements in response to queries.
Meanwhile, SEBI has given the Jaggi brothers 21 days to respond to its preliminary findings, which may be further substantiated by an ongoing forensic audit. In a prior interview, Anmol Jaggi claimed Gensol’s accounts had not been marked as NPAs and that the company was planning to infuse ₹600 crore in fresh liquidity.
