Regulator Securities and Exchange Board of India (SEBI) has barred Gensol Engineering and its promoters, Anmol Singh Jaggi and Puneet Singh Jaggi, from the securities market. The action, through an interim direction, came in the wake of the regulator discovering mis-utilisation and diversion of funds, among other violations.
Gensol Engineering, once a high-flying player in the green energy space, is involved in EPC and advisory services for solar projects, as well as EV manufacturing and leasing.
In its order dated April 15, the markets watchdog pointed out that the Jaggi brothers and their related parties benefited from Gensol’s funds through layered transactions, which the listed company failed to disclose to the exchanges.
As mentioned in the SEBI order, Gensol had secured term loans to the tune of Rs 977.75 crore from Indian Renewable Energy Development Agency (IREDA) and Power Finance Corporation (PFC). Of this, Rs 663.89 crore was meant to procure 6,400 crore electric vehicles, and leased to EV ride hailing platform BluSmart, which was co-founded by the Jaggi brothers. Gensol was to provide a 20% equity contribution, bringing the total expected deployment for this purchase to Rs 829.86 crore.
The company, however, bought only 4,704 EVs for Rs 567.73 crore. The balance Rs 262.13 crore remains unaccounted a year after Gensol availed the financing, the SEBI order noted.
Gensol had also allegedly falsified 'no overdue' letters from IREDA and PFC, as credit rating agency ICRA had pointed out while downgrading the company's credit facilities to D due to a delay in debt repayments. ICRA assigns a D rating to credit facilities when an entity has defaulted, or is expected to default soon.
Read Here: Gensol promoter Anmol Jaggi invested in Ashneer Grover's startup using diverted funds: Sebi interim order
Bank statements of Gensol and the dealer for the procurement, Go-Auto, revealed that once the funds were transferred to the latter for purchase of EVs, "they were, in most of the instances, either transferred back to the company itself or routed to entities that were directly or indirectly related to Anmol Singh Jaggi and Puneet Singh Jaggi", the regulator said in its order.
SEBI listed nine related parties to which the funds were transferred before they were routed back to the Jaggi brothers. While eight of them have been declared by Gensol as related parties, one, Wellray Solar Industries, was not.
How the funds were used
On October 6, 2022, it was found that Capbridge Ventures transferred Rs 42.94 crore to DLF for purchase of a luxury apartment in The Camellias in Gurgaon. The property was initially transferred to Jasminder Kaur, mother of the Jaggi brothers. Thereafter, on request, the allotment was substituted in favour of Capbridge.
Funds transferred by Wellray to Anmol Singh Jaggi and Puneet Singh Jaggi were handed over to related parties in Gensol, family members, or were used for personal use. These included foreign currency purchase, payments to multiple credit cards, and a golf set worth Rs 26 lakh.
Between them, the Jaggi brothers spent Rs 38.59 crore of the funds they received.
"The promoters were running a listed public company as if it were a proprietary firm," SEBI said, in its order.
Gensol Engineering, once a high-flying player in the green energy space, is involved in EPC and advisory services for solar projects, as well as EV manufacturing and leasing.
In its order dated April 15, the markets watchdog pointed out that the Jaggi brothers and their related parties benefited from Gensol’s funds through layered transactions, which the listed company failed to disclose to the exchanges.
As mentioned in the SEBI order, Gensol had secured term loans to the tune of Rs 977.75 crore from Indian Renewable Energy Development Agency (IREDA) and Power Finance Corporation (PFC). Of this, Rs 663.89 crore was meant to procure 6,400 crore electric vehicles, and leased to EV ride hailing platform BluSmart, which was co-founded by the Jaggi brothers. Gensol was to provide a 20% equity contribution, bringing the total expected deployment for this purchase to Rs 829.86 crore.
The company, however, bought only 4,704 EVs for Rs 567.73 crore. The balance Rs 262.13 crore remains unaccounted a year after Gensol availed the financing, the SEBI order noted.
Gensol had also allegedly falsified 'no overdue' letters from IREDA and PFC, as credit rating agency ICRA had pointed out while downgrading the company's credit facilities to D due to a delay in debt repayments. ICRA assigns a D rating to credit facilities when an entity has defaulted, or is expected to default soon.
Read Here: Gensol promoter Anmol Jaggi invested in Ashneer Grover's startup using diverted funds: Sebi interim order
Bank statements of Gensol and the dealer for the procurement, Go-Auto, revealed that once the funds were transferred to the latter for purchase of EVs, "they were, in most of the instances, either transferred back to the company itself or routed to entities that were directly or indirectly related to Anmol Singh Jaggi and Puneet Singh Jaggi", the regulator said in its order.
SEBI listed nine related parties to which the funds were transferred before they were routed back to the Jaggi brothers. While eight of them have been declared by Gensol as related parties, one, Wellray Solar Industries, was not.
How the funds were used
On October 6, 2022, it was found that Capbridge Ventures transferred Rs 42.94 crore to DLF for purchase of a luxury apartment in The Camellias in Gurgaon. The property was initially transferred to Jasminder Kaur, mother of the Jaggi brothers. Thereafter, on request, the allotment was substituted in favour of Capbridge.
Funds transferred by Wellray to Anmol Singh Jaggi and Puneet Singh Jaggi were handed over to related parties in Gensol, family members, or were used for personal use. These included foreign currency purchase, payments to multiple credit cards, and a golf set worth Rs 26 lakh.
Between them, the Jaggi brothers spent Rs 38.59 crore of the funds they received.
"The promoters were running a listed public company as if it were a proprietary firm," SEBI said, in its order.
