SEBI Investigates Gensol Engineering Over Alleged EV Loan Misuse
India’s Securities and Exchange Board (SEBI) has launched an investigation into Gensol Engineering following allegations of misusing electric vehicle (EV) loans. The probe has also implicated BluSmart, a prominent EV ride-hailing startup linked to Gensol and once considered a rising compe***** to Uber in India.
Key Developments in the Investigation
- Founders Barred: SEBI has temporarily restricted Gensol’s founders, Anmol Singh Jaggi and Puneet Singh Jaggi, from holding executive roles in the publicly listed company or participating in securities markets during the inquiry. The Jaggi brothers are also co-founders of BluSmart Mobility.
- Allegations of Fund Diversion: The regulator alleges that ₹9.78 billion (~$114 million) in loans—sanctioned by state-owned lenders for EV procurement—were partially diverted for personal expenses, including luxury real estate purchases near Delhi.
- Discrepancy in EV Purchases: While ₹6.63 billion was earmarked for 6,400 EVs to lease to BluSmart, only 4,704 vehicles (worth ₹5.68 billion) were acquired, per SEBI’s interim order.
BluSmart’s Challenges Amid the Fallout
BluSmart, which shares founders with Gensol, faces mounting operational and financial pressures:
- Dubai Exit: The startup recently discontinued services in Dubai after a short-lived expansion in 2024.
- Funding Struggles: Despite raising $25 million in early 2024 for EV charging infrastructure, BluSmart failed to secure a planned $100 million funding round later that year.
- Potential Pivot: Reports suggest BluSmart may transition into a fleet partner for Uber to stabilize operations in India (Delhi-NCR, Bengaluru, Mumbai).
Founders’ Response and Market Impact
Anmol Singh Jaggi emphasized cooperation with SEBI, calling the investigation an “interim step” and expressing confidence in resolving the matter. However, Gensol’s stock has plummeted 83% YTD, trading at ₹129 as of Tuesday’s market close.
Background and Industry Context
- BluSmart’s Origins: Launched in 2018 as Gensol Mobility, the startup initially operated Uber’s EV fleet before pivoting to an independent ride-hailing service.
- Investor Backing: BluSmart has raised $486 million+ from backers like BP Ventures and Mayfield India Fund.
- Fleet Status: The company operates 6,000 EVs (primarily Tata Tigor sedans and MG ZS SUVs) but fell short of its 2024 target to expand to 10,000 vehicles.
SEBI’s probe underscores growing scrutiny of corporate governance and green financing accountability in India’s EV sector. The outcome could reshape BluSmart’s future and investor confidence in sustainable mobility startups.
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