The Ministry of Corporate Affairs (MCA) has begun a probe into Gensol Engineering and its group company BluSmart Mobility for allegedly flouting corporate governance norms under the Companies Act. The government will be submitted with a report after the three-month investigation.
The investigation, initiated under Section 210 of the Companies Act, will focus on the charges of diversion of funds levelled in the interim report of the Securities and Exchange Board of India (SEBI) on Gensol in mid-April.
The market regulator had learned about Gensol’s malpractices in 2024 after a complaint regarding share price manipulation and diversion of funds in the company.
SEBI sought information from credit rating agencies ICRA and CARE as some of the documents the company provided to support its debt servicing history appeared to be forged. Throughout the investigation, the ratings agencies informed SEBI that Gensol provided statements from all lenders except IREDA and PFC when the latter demanded term loan statements. Gensol issued conduct letters purportedly given by PFC and IREDA to these two lenders in which Gensol claimed it was regular with its debt payment. When the rating agencies raised questions with IREDA and PFC seeking clarification, these were told they never issued the said letters.
As they were involved in alleged fraud activities, SEBI made an interim order in April this year barring Anmol Singh Jaggi and Puneet Singh Jaggi, the Gensol promoters, from occupying any KMPs in the company and from entering into securities market transactions. In its decision, SEBI asserted that Gensol provided fake conduct letters purportedly issued by its lenders with the intention of misleading it, credit rating agencies, lenders, and investors.
Additionally, the SEBI probe uncovered that funds that Gensol had received through loans for the acquisition of electric vehicles were utilized partly to buy a luxurious flat in The Camellias, DLF Gurgoan, in the name of a company where Gensol’s MD and his brother are partners. Also, personal luxury expenses such as shopping, travels, and a golf set were funded with the funds that were redirected.