Investigation Looms Over Gensol Engineering and BluSmart
Mumbai, India – The Ministry of Corporate Affairs is preparing to investigate Gensol Engineering along with its affiliated entity, BluSmart, to determine if any corporate governance breaches have occurred. This development comes in the wake of recent actions taken by the Securities and Exchange Board of India (SEBI), which has already banned the promoters of Gensol, Anmol and Puneet Jaggi, from participating in capital markets due to alleged fund misappropriation and document forgery.
Regulatory Scrutiny Intensifies
The ministry is currently assessing information available in the public domain and is considering certain pieces of information it has received regarding Gensol and BluSmart. A decision regarding the initiation of a formal inquiry is anticipated within the next two weeks.
A senior government official remarked, “Material available both in the public domain and certain information the ministry has received are being studied,” indicating that the ministry is taking its time to ensure a thorough evaluation before proceeding.
Concerns of Fund Diversion
Key issues under investigation include the potential diversion of funds, specifically checking whether funds were used for personal expenses by the promoters. This includes transactions related to luxury property purchases, payments to family members, and investments in privately owned entities linked to the promoters.
According to the government official involved in the matter, “The ministry will focus on ascertaining if there were any fund diversions for personal expenses of the promoters.” A conclusion on this aspect is expected soon.
Background of the Investigation
This probe ties back to SEBI’s decision earlier this week to impose restrictions on the Jaggi brothers, alongside a forensic audit mandate. Following these developments, BluSmart, the electric vehicle ride-hailing service founded by the Jaggi brothers, has started to wind down operations.
The controversy primarily revolves around the alleged misuse of term loans secured by Gensol from state-owned entities such as the Indian Renewable Energy Development Agency and Power Finance Corporation. According to SEBI, Gensol obtained ₹977.75 crore in loans, of which ₹663.89 crore was earmarked for acquiring 6,400 electric vehicles (EVs). However, Gensol later admitted to acquiring only 4,704 EVs despite obtaining funds for a larger amount. This discrepancy has raised questions about the handling of finances.
Missing Funds and Accountability
The expected expenditure for the EVs was around ₹829.86 crore, which implies that approximately ₹262.13 crore remains unaccounted for based on Gensol’s own admissions and corroborated by EV supplier Go-Auto, which confirmed the delivery of 4,704 units amounting to ₹567.73 crore.
As the Ministry of Corporate Affairs continues to review the situation, no formal notices or information requests have yet been issued to Gensol or BluSmart by the ministry’s regional directors. Investigations pertaining to significant fraud are typically delegated to the Serious Fraud Investigation Office (SFIO), the ministry’s enforcement branch.
For ongoing updates regarding this investigation, stakeholders in the corporate sector are advised to monitor developments closely as the next steps from the ministry are expected shortly.
