Gensol’s share price continues to plummet after SEBI action; BluSmart suspends operations

Gensol Engineering’s share price was down 5 per cent on Thursday to Rs 116.54 apiece on the NSE. In the past five days, the company’s stock lost 16.55 per cent value. According to exchange data, Gensol’s share price declined 50.76 per cent in the past month, 85.98 per cent in the past six months, and 87.09 per cent in the past year.

Gensol is a company in the renewables sector which was founded in 2007. It was listed on the stock exchanges in 2019. It started as an operator in the engineering, procurement, and construction space with a focus on solar energy projects.

Along with the Gensol stock price crash, BluSmart also suspended operations on Thursday amid the brewing crisis, with users failing to book cabs on BluSmart app. The Delhi airport also issued an advisory, cautioning flyers that BluSmart has temporarily suspended operations, and asking them to avail other cab and transportation services to and from the airport. Operational in Delhi-NCR, Mumbai, and Bengaluru, the EV cab service was particularly popular for airport drop-offs and pick-ups.

The crisis at Gensol

SEBI has barred the Jaggi brothers from the securities market over alleged financial mismanagement and misuse of funds. According to the regulator, the brothers diverted substantial loan amounts through complex transactions for personal use, including the acquisition of luxury real estate, and continuously misled investors.

SEBI has barred the two from the securities market for financial mismanagement and misuse of funds. The investigation into the brothers’ vast network of transactions routed through related-party entities and round-tripping began following a complaint of stock manipulation and fund diversion in June 2024.

Following the regulator’s action, the company announced the resignation of an independent director—Arun Menon—and its promoters.

In an email addressed to Anmol Singh Jaggi, Menon stated that he had offered to resign earlier but was asked to stay on until the IPO of Matrix Gas and Renewables, another unit of the Gensol group.

Menon said he had offered to resign since he felt he was adding “limited value to the company” after multiple requests for a face-to-face meeting with the CFO were not heeded. These meetings were sought for clarity on Gensol’s debt position, Menon said, adding that he had also offered to assist the company with deleveraging through a debt restructuring plan.

“There was growing concern on the leveraging of GEL (Gensol Engineering) balance sheet to fund the capex of other business’s; and the sustainability of servicing such high debt costs by GEL,” Menon said in the email, attached in the exchange filing.

He also cited the terms of his current employment, where the parent company is a private equity firm, stating that it does not allow him to hold an independent director’s role, as a reason for his decision to quit the board immediately.

Gensol clarified that there is “no other undisclosed price-sensitive information apart from that flagged by SEBI known to the Company that could explain the recent movement in the Company’s share price.”

The company denied media reports that it was in discussions for an undisclosed “merger, acquisition, asset sale or any other significant transaction.”

SEBI’s findings

In what is reportedly one of the biggest reported frauds at a startup in India, SEBI’s findings show that Rs 262 crore out of a loan secured from government agencies for purchasing 1,700 EVs, the brothers purchased a luxury apartment in The Camellias, a high-end residential society operated by the DLF Group in Gurugram, Haryana.

A sum of Rs 40 crore was routed to Gensol Group’s related party entity Wellray Solar Solutions via GoAuto, according to the SEBI order.

A sum of Rs 39 crore was transferred to the Jaggi brothers through another series of complex transactions.

Anmol Jaggi directed Rs 50 lakh from the Rs 26 crore received via Wellray into former BharatPe founder Ashneer Grover’s latest venture Third Unicorn.

He also infused Rs 1.35 crore into lithium battery recycling firm BatX Energies.

Anmol Jaggi also reportedly spent money on luxuries such as a golf set from TaylorMade, apart from remitting money to his wife and mother.

Amid these and other discrepancies found by SEBI, the markets regulator ordered the Jaggi brothers to refrain from participating in the securities market. Anmol and Puneet Jaggi are no longer participating in the management of Gensol in compliance with SEBI’s interim order, the company said in an exchange filing.

What investor Vijay Kedia said on Gensol episode

Investor Vijay Kedia took to social media platform X to state that “there are many Gensols still hiding in the cupboard.” In his social media post, Kedia pointed out 10 red flags that scream before a scam.

Kedia cautioned against the overuse of flashy buzzwords such as “AI-powered” and “next-gen” while also pointing out that they often tend to diversify into “unrelated businesses just to ride trending narratives.”

He cautioned against promoters exhibiting a lifestyle that does not align with their company’s performance. Another red flag raised by Kedia was that of excessive related-party transactions carried out by listed companies.

What’s the likely plan for BluSmart?

Gensol Engineering’s board is considering plans to fold up BluSmart and revert to being a fleet operator for US-based cab aggregator Uber in India, the Economic Times had reported, citing people familiar with the matter. Gensol’s shareholders have reportedly approved the transition plan which is expected to start with 700-800 cabs. At its peak, BluSmart clocked 25,000-30,000 rides per day. This figure declined to half in recent weeks, according to the report.