**Executive Summary**
This document is an answer provided by the Minister of State for Finance to the Lok Sabha regarding Unstarred Question No. 1419 concerning financial irregularities in Gensol Engineering Ltd. The answer details the investigation initiated by SEBI, loan defaults, diversion of funds, and actions taken by PFC, IREDA, and the government, including interim orders and the institution of Corporate Insolvency Resolution Process (CIRP). A key date is April 15, 2025, when an interim order was passed.
**Key Points / Main Content**
* **SEBI Investigation:**
* SEBI initiated an investigation against Gensol Engineering Ltd. in December 2024.
* The investigation aims to identify misrepresentations/misstatements in financial statements and diversion of funds from FY 2021-22 to 2024-25.
* The investigation is based on violations of the SEBI Act, 1992, SEBI Regulations of 2003 and 2015.
* **Loan Default and Misinformation:**
* Gensol defaulted on loan repayment of IREDA and PFC.
* The company provided false information to credit rating agencies, claiming no default.
* **Loan Disbursement and Diversion:**
* Rs. 977.75 crore was availed from IREDA and PFC.
* Rs. 663.89 crore was intended for purchasing 6,400 Electric Vehicles (EVs).
* Only 4,704 EVs were procured, with Rs. 262 crore diverted.
* **Legal and Recovery Actions:**
* PFC filed an Original Application (OA) against Gensol for loan default.
* The Hon'ble Debts Recovery Tribunal (DRT) restrained Gensol from disposing assets and appointed a PFC representative for physical possession of the vehicles.
* Corporate Insolvency Resolution Process (CIRP) was initiated, superseding the DRT process.
* Gensol has been admitted into CIRP by National Company Law Tribunal (NCLT).
* IREDA and PFC have filed complaints with the Economic Offences Wing of the Delhi Police.
* **SEBI Orders and Restrictions:**
* SEBI passed an interim order on April 15, 2025, and a confirmatory order on July 30, 2025.
* The orders restrain the company and Key Managerial Personnel (KMPs) from dealing in securities and holding director/KMP positions in Gensol.
**Impact Analysis**
**Stakeholders:**
* **Gensol Engineering Ltd.:**
**Impact:** Subject to investigation for financial irregularities, loan default, and potential violations of SEBI regulations. The company is under CIRP management.
**Action Required:** Comply with CIRP and SEBI orders.
* **Power Finance Corporation (PFC) and Indian Renewable Energy Development Agency Ltd. (IREDA):**
**Impact:** Affected by loan defaults and diversion of funds; pursuing legal and recovery actions.
**Action Required:** Continue pursuing recovery actions through CIRP and legal channels.
* **Key Managerial Personnel (KMPs):**
**Impact:** Restricted from dealing in securities and holding positions within Gensol due to SEBI orders.
**Action Required:** Comply with SEBI restrictions.
Key Entities Referenced
Securities and Exchange Board of India (SEBI): Initiated investigation into Gensol Engineering Ltd. for financial irregularities.
Power Finance Corporation (PFC): Provided a loan to Gensol, filed an Original Application against Gensol for loan default, and had a representative appointed to take physical possession of vehicles.
Indian Renewable Energy Development Agency Ltd. (IREDA): Provided a loan to Gensol and filed a complaint with the Economic Offences Wing of the Delhi Police.
Gensol Engineering Ltd.: Company investigated for financial irregularities including share price manipulation, misappropriation of funds, and loan default.
Insolvency and Bankruptcy Code (IBC), 2016: Mentioned in relation to the Corporate Insolvency Resolution Process (CIRP) initiated against Gensol Engineering Ltd.
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF ECONOMIC AFFAIRS
LOK SABHA
UNSTARRED QUESTION NO. 1419
TO BE ANSWERED ON MONDAY, FEBRUARY 9, 2026/MAGHA 20, 1947 (SAKA)
FINANCIAL IRREGULARITIES IN GENSOL ENGINEERING LTD.
1419. SHRI LAXMIKANT PAPPU NISHAD:
Will the Minister of Finance be pleased to state:
(a) whether it is a fact that SEBI initiated investigation against Gensol Engineering Ltd. for
share price manipulation, misappropriation of funds and other financial irregularities in June
2024, if so, the details thereof;
(b) whether it is true that the company defaulted on loan repayment in December 2024, while
giving false information of "no default" to credit rating agencies, if so, the details thereof;
(c) whether it is true that a loan of Rs. 978 crore from Power Finance Corporation (PFC) and
Indian Renewable Energy Development Agency Ltd. (IREDA) was raised for procuring 6,400
EV vehicles, but only 4,704 vehicles were purchased and about Rs. 262 crore was diverted, if
so, the details thereof;
(d) whether PFC kept the seized vehicle in safe custody, if so, the cost of their disposal and
storage;
(e) whether sufficient time was given to bidders in the public tender, if so, the details thereof;
and
(f) the details of the Government action and liability fixed in the above cases?
ANSWER
MINISTER OF STATE FOR FINANCE
(SHRI PANKAJ CHAUDHARY)
(a) SEBI had initiated a detailed investigation against Gensol Engineering Ltd. in December
2024 to ascertain any misrepresentation/ misstatement in the financial statements and diversion
of funds from the listed entity during the FYs 2021-22 to 2024-25, which is in violation of the
Securities and Exchange Board of India Act, 1992, SEBI (Prohibition of Fraudulent and Unfair
Trade Practices Relating to Securities Market) Regulations, 2003, SEBI (Listing Obligations
and Disclosure Requirements) Regulations, 2015.
(b) As brought out in the Interim Order dated April 15, 2025, Gensol had defaulted in loan
repayment of IREDA and PFC and provided false information to CRAs that it was regular in
its debt servicing.(c) Preliminary observation of SEBI, as brought out in the Interim Order dated April 15, 2025,
ascertain that Rs. 977.75 Crore was availed by the Company from IREDA and PFC as term
loans out of which Rs. 663.89 Crore (Rs. 352. 42 Cr. from PFC and Rs. 311.48 Cr. from
IREDA) was for purchasing 6,400 Electric Vehicles and only 4,704 EVs were procured, as on
the date of the interim order.
(d) to (f) PFC filed an Original Application (OA) against Gensol for loan default and the
Hon’ble Debts Recovery Tribunal (DRT) had restrained the defendants from disposing their
movable as well as immovable assets and appointed PFC representative with liberty to appoint
any independent agency having expertise to take physical possession of the vehicles and
maintain/ preserve the same. However, upon initiation of Corporate Insolvency Resolution
Process (CIRP) the process could not continue. Gensol has been admitted into CIRP by
National Company Law Tribunal (NCLT) and the affairs of the company are being managed
by the Resolution Professional (RP) as per the provisions of the Insolvency and Bankruptcy
Code (IBC), 2016. IREDA and PFC have also filed complaints with the Economic Offences
Wing of the Delhi Police. Further, based on preliminary findings, SEBI has passed an interim
order on April 15, 2025 and a confirmatory order on July 30,2025, and inter-alia restrained
Company and Key Managerial Personnel (KMPs) from buying, selling or dealing in securities
and/or holding the position of a director or a KMP in Gensol until further orders.
****