Image Source: Economic Times Legal World
The Indian Renewable Energy Development Agency (IREDA) has moved an insolvency petition against Gensol Engineering Limited following a default on loans worth ₹5.10 billion (around $59.7 million) by the company. This is the latest in a string of intensifying troubles facing Gensol, a firm already facing stringent regulatory scrutiny for supposed financial irregularities and corporate governance malaise.
Key Highlights
IREDA, the government-owned lender, initiated insolvency proceedings on May 14, 2025, for a default of ₹5,100 crore by Gensol Engineering.
The default follows a wider investigation into the finances of Gensol. The Securities and Exchange Board of India (SEBI) had previously restricted Gensol's promoters, Anmol Singh Jaggi and Puneet Singh Jaggi, from the securities market for suspected diversion of funds and defaults in corporate governance.
Investigations also showed that Gensol had obtained loans worth ₹977 crore from IREDA and Power Finance Corporation (PFC) during FY22-FY24, of which ₹663.89 crore was to be used for buying 6,400 electric vehicles (EVs). Gensol had apparently bought only 4,704 vehicles, and thus the question remains about the utilization of the balance money.
SEBI’s interim order accused Gensol’s promoters of treating the company as a personal “piggy bank,” diverting loan funds for personal use, and forging documents to mislead lenders and credit rating agencies.
The Ministry of Corporate Affairs has ordered a formal probe into Gensol and related entity BluSmart Mobility under Section 210 of the Companies Act, 2013, following allegations of fund diversion and violations of company law.
Credit rating agencies have lowered Gensol's ratings to 'default' level, and both PFC and IREDA are likely to take large provisions on their loan exposures.
The Enforcement Directorate and the Institute of Chartered Accountants of India are also scrutinizing the company's accounting practices, which is contributing to the growing regulatory heat.
The insolvency petition will likely be taken up by the National Company Law Tribunal (NCLT), paving the way for a shift in management or reorganization of Gensol's business.
The development not only threatens the survival of Gensol Engineering but also concerns India's increasingly growing renewable energy and electric mobility industry with its governance standards and the use of funds.
Sources: Reuters, Economic Times, BusinessLine, Upstox, Business Upturn
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