THE GREAT EV COVER-UP: GENSOL’S CRISIS EXPOSED

By C K Neeha Reddy

Introduction

Gensol Engineering Ltd., a leading force in India's electric mobility and renewable energy sector, has earned its name with innovative solutions for solar consulting, EPC services, and development of electric vehicle (EV) infrastructure. The company is based in Ahmedabad, Gujarat, and has been a key force in the clean energy uptake across the country. But in the past few months, Gensol has faced withering criticism following increasing financial strain, regulator moves, and governance issues at the group. The company's transformation, controversies involving its promoters, and implications for its future are explored in this article.

A Web of Deception

Gensol Engineering Ltd. (GEL) took the limelight at the Bharat Mobility Expo 2025 with the unveiling of two state-of-the-art electric vehicles and a reported 30,000 pre-bookings. In so far as the EV business of the company is concerned, the announcement calmed the market and investors alike. Since then however, a follow-up SEBI investigation has shown that these pre-orders were nothing more than non-binding Memorandums of Understanding with no legally binding delivery dates or prices.

NSE authorities went to the factory of Gensol in Pune, but it was hardly occupied, contrary to the assertion of the company about mass production in the future.SEBI's probe found that Gensol overstated its order book and provided a bloated account of its operational success in order to deceive lenders, investors, and rating agencies.

When it was found that Gensol Engineering had taken a whopping ₹978 crore loan from government-backed institutions the Power Finance Corporation (PFC) and the Indian Renewable Energy Development Agency (IREDA), the scandal around the company increased even more.  The money was supposed to be used to buy 6,400 electric cars, which would subsequently be leased to BluSmart, a ride-hailing business.

But according to SEBI's research, just 4,704 cars were bought, leaving ₹262 crore in the hole.  The regulator claims that this gap was transferred for personal indulgences rather than a result of delayed procurement.

The SEBI study said that the Jaggi brothers, founders of Gensol, allegedly spent the missing money on a lavish lifestyle. One of the most high-profile buys was a plush condominium in The Camellias, one of Gurgaon's priciest residential complexes. Additional missing money was spent on luxury goods, credit card charges, transfers to family members, golf equipment, and international travel.

This disclosure fueled the fire and generated even more focus on the firm's governance and financial behavior.

Impact on investors

The precipitous decline in promoter shareholding—from 62.65% in December 2024 to 35.13% by March 2025—created fears that the promoters were selling their stakes stealthily while also committed more shares to institutions such as IREDA. SEBI was concerned that this would further dilute and ensnare more retail investors who were unaware of the emerging corporate crisis.

Category	No. of Shareholders	% of Total Shares Held
Promoter	3	35.13%
Public	109,869	64.88%
Total	109,872	100.00%

Individual investors, who now own around 65% of the firm, are taking the hit. The shares have crashed more than 90% from their June 2024 high of ₹1,126 to a mere ₹117.50, erasing almost ₹3,853 crore worth of market capitalization. With the shares trapped in back-to-back lower circuits and no buyers around, several investors are stuck, losing their savings. Over and above the misery is that the stock has no institutional support, there are no mutual fund holdings, and is now marked with low credit ratings by both ICRA and CARE, further darkening its prospects.

In turn, SEBI has imposed firm interim steps to safeguard investor interests. It has suspended the planned 1:10 stock split, saying that it may lure more uninformed retail investors into a risky stock. SEBI also prohibited the promoters from offloading additional shares and initiated a forensic probe into fund misappropriation. The regulator has put Gensol in the 'T' Group and Stage-1 of the Enhanced Surveillance Measures (ESM) and has capped speculative trading along with imposing disclosure requirements. These measures are important to prevent more damage but occur after significant value destruction has occurred. SEBI’s actions now aim to prevent more retail investors from falling into what it describes as a “trap,” while the larger issue of corporate governance failures remains under scrutiny.

SEBI's Actions Against Gensol Engineering Ltd.

SEBI has initiated a set of strong actions against Gensol Engineering and its promoters amid serious charges of financial mismanagement and diversion of funds. Anmol Jaggi and Puneet Jaggi, the promoters and co-founders of Gensol, have been restricted from occupying any director-level or key managerial positions in the company or any subsidiary thereof. They have also been stopped from accessing or trading in the securities market until further notice. These restrictions are part of SEBI’s interim measures aimed at preventing further harm to investors and safeguarding the integrity of the financial markets.

In a further step, SEBI has ordered a forensic audit of Gensol’s financials. This audit will investigate the application of loan proceeds, related-party transactions, and financial disclosures to identify the extent of the reported misappropriation. One of the major red flags noticed by the regulator was diversion of ₹262 crore from the ₹978 crore loan, which was intended to be used for the procurement of electric vehicles. The money was invested in personal indulgences, such as a ₹50 crore flat in a luxury housing society, overseas trips, and other lifestyle-related costs.

To rescue retail investors from being duped, SEBI halted Gensol's proposed 1:10 stock split as well. The regulator expressed concerns that the corporate move would induce more retail investors under false premises, thereby causing them even larger losses. SEBI was scathing in its criticism of the promoters' conduct, saying they had, in effect, used the publicly listed company as if it were their own. The regulator cited a complete breakdown in internal controls, governance principles, and ethical practices, which held the Jaggi brothers responsible for losing investors' trust.

While these actions are currently interim in nature, SEBI’s findings may pave the way for more serious consequences. Depending on the outcome of the forensic audit, legal and criminal proceedings could follow, potentially resulting in prosecution and financial penalties. These developments underscore the importance of regulatory oversight in ensuring transparency and accountability in publicly listed companies.

Conclusion

The Gensol Engineering mishap is a wake-up call on how lack of corporate governance, no accountability, and no transparency can have catastrophic results for a company as well as the thousands of investors who have risked their money in it. It has now emerged that what was at one point a promising new entrant in India's EV and clean energy spaces is in reality a cautionary tale of financial scam and abuse with the rules. With market curbs, forensic audits, and company action suspension, SEBI's swift action tries to avoid further damage and protect credulous investors. Still, the episode creates urgent questions on the regulation of small and mid-cap companies, the position of rating agencies, and the susceptibility of retail investors in such circumstances. As the probe goes ahead, only time will answer if justice is administered and if it will lead to stricter norms of corporate governance for India's capital markets.