Gensol Engineering SEBI Order: Rs 50 Crore Flat, Startup Investment, And Others – How BluSmart Promoters' Misused Funds?

The Securities and Exchange Board of India ( SEBI ) has issued a strict order against Gensol Engineering Limited (GEL) and its promoters, Anmol Singh Jaggi and Puneet Singh Jaggi, over serious allegations of misusing and diverting company funds. The capital markets regulator has barred Gensol Engineering and its promoters, from participating in the securities markets until further orders.

This order, released on Tuesday, has raised concerns not only about Gensol Engineering but also about BluSmart, a startup co-founded by Anmol Jaggi, which focuses on electric cabs. SEBI’s investigation shows that funds meant for Gensol’s electric vehicle (EV) business were misused for personal expenses, directly impacting BluSmart.

BluSmart Startup Under Scrutiny

BluSmart, a key player in the electric vehicle market, has come under the spotlight after SEBI found that Gensol misused loans intended for EV procurement. Instead of buying the agreed-upon number of electric vehicles, a large portion of the funds was used for personal expenses and investments unrelated to the business.

According to the SEBI order, Gensol secured loans from the Indian Renewable Energy Development Agency (IREDA) and Power Finance Corporation (PFC) to buy 6,400 electric vehicles. However, the company only purchased 4,704 EVs, leaving Rs 262 crore of the funds unaccounted. SEBI’s order revealed that these funds were allegedly redirected to personal interests, such as the purchase of a luxury flat and investments in unrelated startups.

Also Read: Gensol Engineering Share Price: Why Company Share Tanked 5% - All You Need To Know

Misuse of Funds

The SEBI order points out that Anmol Singh Jaggi and Puneet Singh Jaggi misused a part of the loan to buy a flat worth Rs 42.94 crore in DLF Camellias.

Additionally, Rs 50 crore was transferred to a promoter-controlled entity, Capbridge. The promoters also used Rs 50 lakh from the diverted funds to invest in Ashneer Grover’s startup, Third Unicorn and spent money on personal travel.

Gensol Directors Accused of Diverting Funds

Anmol and Puneet Singh Jaggi are accused of misappropriating company funds for personal gain. SEBI found that Gensol failed to disclose financial dealings with entities controlled by the promoters, which violated the rules. The promoters were also involved in funding a company, Wellray Solar Industries Pvt. Ltd., which traded in Gensol’s shares, raising concerns of possible market manipulation.

SEBI's Stern Warning

SEBI has raised serious concerns about how Gensol was managed. The regulator noted that the company was being run more like a private business than a publicly listed company. Funds were diverted to unrelated expenses and personal use, showing weak internal controls at Gensol.

SEBI warned that these misused funds might eventually need to be written off, resulting in losses for investors. Ashwani Bhatia, SEBI’s whole-time member, said that the company’s actions demonstrated a clear violation of corporate governance, with the promoters having too much-unchecked control over company funds.

SEBI's Actions

To hold Gensol accountable, SEBI has ordered a forensic audit of Gensol’s accounts and those of its related entities. This audit will help determine the full extent of the financial mismanagement. Additionally, SEBI has suspended Gensol’s planned stock split, which was intended to attract more retail investors, until further investigation is completed.