SEBI finds no manufacturing at Gensol's Pune EV plant, only 2-3 labourers

New Delhi: Markets regulator SEBI has said it found "no manufacturing activity" at Gensol Engineering's electric vehicle (EV) plant in Pune with only 2-3 labourers present when a National Stock Exchange (NSE) official visited the site.

These revelations were part of markets regulator SEBI's interim order issued on April 15 following a complaint received in June 2024 alleging manipulation of Gensol's share price and misappropriation of funds.

In its order, the Securities and Exchange Board of India (SEBI) found discrepancies as well as misleading disclosures to investors by Gensol Engineering, a company promoted by brothers Anmol Singh Jaggi and Puneet Singh Jaggi.

One of the disclosures came from an investigation conducted by the NSE, which revealed a lack of manufacturing activity at Gensol's EV plant -- Gensol Electric Vehicle Private Ltd -- at Chakan in Pune.

During a site visit to the facility on April 9, an NSE official found only 2-3 labourers present.

"It was found that there was no manufacturing activity at the plant with only 2-3 labourers present there. The NSE official called for details of electricity bills of the unit and it was observed that the maximum amount billed by Mahavitaran during the last 12 months was Rs 1,57,037.01 for December 2024.

"Hence, it can be inferred that there has been no manufacturing activity at the plant site which is on a leased property," SEBI revealed in its interim order passed on April 15.

The visit followed an announcement by Gensol to the stock exchanges on January 28, 2025, claiming it had received pre-orders for 30,000 units of its newly launched EVs showcased at the Bharat Mobility Global Expo 2025.

However, upon reviewing the documents provided by the company, SEBI found that the orders were Memorandum of Understandings (MoUs) entered with nine entities for 29,000 cars.

The MoUs were in the nature of an expression of willingness with no reference to the price of the vehicle or delivery schedules.

Therefore, it prima facie appeared that the company was making misleading disclosures to investors, SEBI stated.

In another disclosure dated January 16, 2025, Gensol informed the exchanges regarding a strategic tie-up with Refex Green Mobility Ltd "for the transfer of 2,997 electric four-wheelers" to Refex.

As a part of the tie-up, Refex was to assume Gensol's existing loan of Rs 315 crore. However, in a disclosure dated March 28, the proposed takeover by Refex was withdrawn.

In yet another disclosure dated February 25, 2025, Gensol informed the exchanges that it had signed a non-binding term sheet for Rs 350 crore for a strategic transaction involving the sale of Gensol's US subsidiary -- Scorpius Trackers Inc.

It was noted that the US subsidiary was incorporated on July 22, 2024.

When probed by SEBI regarding the basis of such valuation of Rs 350 crore, Gensol failed to submit any explanation or rationale.

These were uncovered in a SEBI probe, which prima facie, revealed "mis-utilization and diversion of funds of the company in a fraudulent manner by its promoter directors, Anmol Singh Jaggi and Puneet Singh Jaggi, who are also the direct beneficiaries of the diverted funds".

Gensol secured Rs 977.75 crore in loans from IREDA and PFC between FY22 and FY24. Of the loan, Rs 663.89 crore was meant for purchasing 6,400 EVs. However, Gensol admitted to acquiring only 4,704 EVs, worth Rs 567.73 crore, as confirmed by supplier Go-Auto.

Given that Gensol was also required to provide 20 per cent equity contribution, the total outlay should have been Rs 829.86 crore, leaving an unaccounted-for amount of Rs 262.13 crore.

The SEBI probe found that funds meant for EV purchases were often routed back to Gensol or entities linked to Jaggi brothers.

Some of the funds were used for personal expenses of the promoters, such as the purchase of a luxury apartment, transfers to close relatives, and investments benefiting private entities owned by the promoters.

In response to these governance lapses, SEBI took several stringent measures, including prohibiting Gensol and its promoters -- Jaggi brothers-from accessing the securities market until further notice.

Also, it barred the Jaggi brothers from holding any directorship or key management position in Gensol.

Additionally, SEBI directed Gensol Engineering to put its planned stock split into the ratio of 1:10 on hold.

Following the order, the brothers stepped down as the company's directors.