The failure of officials at PFC and IREDA in protecting public money from misuse and ensuring the integrity of their lending practices has come into focus.
NEW DELHI: The Securities and Exchange Board of India (SEBI), in a recently issued interim order against the promoters of Gensol Engineering Limited—a publicly listed company that operates in the renewable energy and cab service provider BluSmart—revealed alarming findings, including unaccounted funds, misappropriation of public money for personal expenses and failure of Government of India undertakings in ensuring that the public money that they gave to the private company was not misused.
As per the investigation by SEBI, which was acting on a complaint that it received last year, Gensol failed to account for approximately Rs 262.13 crores.
This sum, as per SEBI, represents the difference between the funds the company raised to procure 6,400 electric vehicles (EVs) and the actual expenditure for purchasing 4,704 EVs, which amounted to Rs 567.73 crores.
While the remaining vehicles were not purchased, the funds that were raised for it were diverted through layered transactions to entities directly or indirectly connected to Gensol’s promoters and directors, Anmol Singh Jaggi and Puneet Singh Jaggi.
A portion of the misused funds was allegedly spent on personal expenses including purchasing a luxury flat worth Rs 42.94 crores in “The Camellias” project by DLF Limited, located in Gurgaon, showcasing how new age entrepreneurs are using public money to get “rich”.
Additionally, transactions were carried out for other personal expenses such as foreign currency purchases, credit card payments and purchasing golf equipment.
These funds were routed through Capbridge Ventures LLP, where the Jaggi brothers hold key positions.
SEBI’s order disclosed that Gensol availed term loans amounting to Rs 977.75 crores from two Government of India creditors: Power Finance Corporation (PFC) and Indian Renewable Energy Development Agency Ltd (IREDA).
The Ministry of Power-governed PFC, specializes in power sector lending, while IREDA, which is supervised by the Ministry of New and Renewable Energy, provides funding for renewable energy projects.
Of these loans, Rs 663.89 crores were earmarked for procuring electric vehicles to be leased to BluSmart Mobility, a ride-hailing service and a related party of Gensol.
However, SEBI found that loan proceeds intended for EV procurement went to Gensol and into promoter-linked entities for unconnected purposes such as acquiring real estate and trading in Gensol’s shares.
For instance, Wellray Solar Industries Pvt. Ltd., identified as a historically connected entity to Gensol, received Rs 424.14 crores from Gensol during FY 2023 and FY 2024, of which a significant portion was utilized for transactions unrelated to business objectives.
As per the analysis of the documents, there were significant delays and defaults in debt servicing to both PFC and IREDA, which should have set alarm bells ringing, unless deliberately ignored by government officials.
SEBI uncovered multiple defaults, including delayed payments of interest and principal amounts, with overdue sums continuing beyond the prescribed 30-day disclosure period stipulated by SEBI regulations. In some cases, payments remained entirely unpaid.
Records show that Gensol falsified Conduct Letters, purportedly issued by PFC and IREDA, to claim that its accounts were regular and without overdue payments.
Later, upon verification, both institutions denied issuing such letters, exposing Gensol’s fraudulent practices.
The failure of officials at PFC and IREDA in protecting public money from misuse and ensuring the integrity of their lending practices has also come in focus post SEBI’s findings.
The misuse of public funds by Gensol demonstrates how institutional safeguards failed to prevent fraudulent activities and diversion of funds.
PFC and IREDA’s inability to monitor the end-use of funds stands as a glaring lapse. Despite being high-stakes loans meant for specific objectives like procuring electric vehicles, a substantial portion of these funds—Rs 262.13 crores—remains unaccounted for, and Rs 42.94 crores were blatantly spent on personal luxuries such as a luxury apartment in Gurgaon.
Both institutions appear to have relied heavily on borrower-provided information without sufficient independent verification. This lack of proactive oversight allowed Gensol to reroute loan proceeds through layered transactions to promoter-linked entities, ultimately using public money for unrelated purposes such as real estate purchases, credit card bills, and even foreign currency.
Furthermore, PFC and IREDA issued funds without implementing robust mechanisms for monitoring borrower conduct. Gensol managed to conceal its defaults from creditors and rating agencies by submitting falsified Conduct Letters, purportedly from PFC and IREDA, certifying regular loan servicing. Both institutions later denied issuing these letters, but by then, the damage was done—public money had already been redirected, and rating agencies had acted on misleading information.
SEBI’s investigation has revealed multiple instances of defaults by Gensol on loans from both PFC and IREDA, including overdue payments that extended beyond the prescribed 30-day disclosure period. Despite clear regulations requiring immediate reporting of such defaults, neither PFC nor IREDA took assertive action to mitigate risks or recover dues. Instead, both institutions continued to disburse funds without ensuring compliance with repayment obligations.
PFC and IREDA’s shortcomings in safeguarding public money not only facilitated the misuse of funds but also undermined the confidence of investors and stakeholders in their governance frameworks.
The Sunday Guardian sent a detailed email to the CMD of both these institutions, Pradip Das of IREDA and Parminder Chopra of PFC.
In a media statement shared with the Sunday Guardian on 22 April, PFC said that it was actively managing the Gensol situation.
“Out of the ₹587 crore loan sanctioned towards electric 4-wheeler vehicles, PFC had only disbursed ₹352 crore to Gensol for the leasing of 3,000 EVs to BluSmart Mobility. Till date,
2,741 vehicles have been delivered and hypothecated to PFC as confirmed by third party agencies appointed by PFC.Additionally, PFC also has pledge of Gensol’s equity shares and Non-Convertible Debentures (NCDs), a Corporate Guarantee from Gensol Ventures Private Limited, and Personal Guarantees from promoters. Liquid assets in the form of TRA balances, DSRA balances, and Fixed Deposit by BluSmart with a lien marked to PFC are also in place.”
It further stated, “Repayments on the disbursed amount had commenced with ₹45 crore repaid, leaving a principal outstanding of ₹307 crore as on 18 th Apr 2025. Until January 31, 2025, Gensol was servicing its dues regularly. In Q4’ 25, PFC invoked the Debt Service Reserve Account (DSRA) to clear February and March 2025 dues. PFC is actively pursuing further actions in the instant case and exploring all possible options. Furthermore, PFC has filed a complaint with the Economic Offences Wing (EoW) concerning the issuance of falsified documents.”