Three independent directors at Gensol Engineering resign after SEBI exposes co-founders’ fraud

Three independent directors of Gensol Engineering Ltd (GEL) — Arun Menon, Harsh Singh, and Kuljit Singh Popli — have stepped down from their roles in quick succession, deepening the crisis at the Ahmedabad-based company after a regulatory crackdown by the Securities and Exchange Board of India (SEBI).

Their resignations come shortly after SEBI issued an interim order against Gensol promoters Anmol Singh Jaggi and Puneet Singh Jaggi, barring them from holding any managerial or board positions, and alleging misuse of funds earmarked for Gensol's electric vehicle business.

A breakdown in governance

In his resignation letter dated April 16, Arun Menon, who served as an independent director, said he had raised concerns about the company's rising debt and offered assistance in restructuring its liabilities — proposals that were left unaddressed.

"Dear Anmol, I would like to take you back to last year, July / August of 2024, when I had tried reaching you to seek clarity on the debt posion of the company, and had also offered assistance to reduce the interest cost through a debt restructure route. While you had messaged me that you would call back, it never progressed. I had also spoken to Mr. Parmar on 2-3 occasions and asked him for a meeting with the CFO, which never seemed to materialise," Menon wrote.

"There was growing concern on the leveraging of GEL balance sheet to fund the capex of other businesses; and the sustainability of servicing such high debt costs by GEL," Menon wrote. He noted that he had intended to resign the previous year, but was asked to stay on until the initial public offering (IPO) of Matrix Gas & Renewables, a Gensol group company, was completed. That listing now appears uncertain.

Menon also cited professional constraints at his current private equity firm, which restricts him from holding independent directorships in other companies.

"No position to continue"

In his letter addressed to the board, KS Popli expressed deep disappointment over the company's trajectory. “Recent developments and news in the media have pained me immensely," he wrote, adding that he had hoped for positive changes over the past month but was dismayed by how events unfolded. "I am not in a position to continue as Independent Director.” 

Popli confirmed that his resignation was not prompted by any other material reasons and affirmed compliance with SEBI regulations.

"A more experienced person is required"

Harsh Singh, who also resigned with immediate effect, cited personal constraints and professional commitments in Patna. "I sincerely feel that a more experienced person in my place is required on the Board as an independent director to steer the company through these difficult times," Singh wrote. 

He added that his decision was not due to any disagreements or governance concerns and affirmed that he holds no other directorship in any listed entity.

Promoters step down, forensic audit ordered

The resignations follow a blistering interim order from SEBI, which accused Anmol Singh Jaggi and Puneet Singh Jaggi of siphoning off funds intended for business use. According to the regulator, company money was allegedly diverted to buy a luxury apartment and cover personal expenses. 

SEBI ordered a forensic audit of Gensol’s books, citing a “complete breakdown” of governance. The company also said that Jaggi brothers have stepped down from their managerial positions at Gensol following the order.

"We affirm that Gensol Engineering Limited will fully cooperate with the forensic audit to be conducted at the behest of SEBI. As directed in the interim order, SEBI will appoint a forensic auditor to thoroughly examine the books of accounts of the Company and its related entities. The Company is committed to providing the auditor with complete access to records and information to ensure a transparent and comprehensive audit process," the company said in an exchange filing.

Gensol has seen a rapid rise in recent years, including the launch of its EV platform BluSmart. However, the recent developments have cast a shadow over both companies. BluSmart, co-founded by Anmol Jaggi, suspended new ride bookings through its app and delayed promised refunds to customers, extending the repayment window up to 90 days.