PFC flags Gensol loan as fraud over undelivered electric vehicles

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State-run Power Finance Corporation (PFC) has classified the loan given to Gensol Engineering Ltd as fraud after its preliminary inquiry found irregularities in the delivery of electric vehicles (EVs) financed under the deal.

“Based on the preliminary inquiry, we have considered it as fraud and provided for 100 percent because there are no overdues in the case of PFC,” chairman and managing director Parminder Chopra said in a post earnings briefing.

The state-run company is expecting a full investigation report on the issue within a day or two.

Loan disbursal

PFC had disbursed around Rs 352 crore to Gensol in three tranches to finance the purchase of 3,000 EVs. While the first two batches of 1,000 vehicles each were delivered, the final tranche saw delays. Only 741 vehicles were supplied, and approximately 259 remain undelivered despite payment having been made to the dealer, Go-Auto, Chopra said.

“The advance has gone to the dealer, but the dealer has not supplied the cars. We have been following it up, but there has been a delay on the part of what verbally has been discussed... that the FAME scheme was discontinued and there were certain issues with respect to the pricing of the vehicles,” she added.

PFC invoked bank guarantees and recovered Rs 44 crore, covering payments made for vehicles that were never delivered. Current outstanding dues from Gensol amount to Rs 263 crore, the financier said.

Chopra said, "There was a SEBI (Securities and Exchange Board of India) report stating funding for 1,000 vehicles was diverted, but we have proof against those 1,000 vehicles. We have disbursed the loan in three tranches, 1,000 vehicles each. First tranche fully came, second tranche fully came. Second tranche has been referred by the SEBI and the third tranche of 741 vehicles has come, and for the balance, the payment has already been made to the dealer."

PFC has been monitoring the TRA (Trust and Retention Account) very tightly to ensure that the payment goes for its intended purpose, she said, adding, “Payment going to the dealer for purchase of vehicles, I think beyond that we are also not able to track,” she added.

SEBI findings

The comments come as SEBI reportedly found that in many instances, funds transferred to Go-Auto—ostensibly for EV purchases—were routed back to Gensol or to entities linked to the promoters, including Anmol Singh Jaggi. SEBI analysed bank statements of both Gensol and Go-Auto and raised concerns about possible round-tripping and misuse of public funds intended for EV fleet deployment.

When asked about recoveries for the outstanding amount, Chopra said that the company would be exploring different ways to liquidate the security that has been invoked.

Debt recovery

Moneycontrol reported on May 21 that PFC is likely to initiate proceedings against Gensol before the Debt Recovery Tribunal (DRT) to recover its dues, even as Indian Renewable Energy Development Agency (IREDA) has already dragged the troubled company to the National Company Law Tribunal (NCLT).

When asked about exploring the DRT route, Chopra said, “If recovery through other means falls short, we may consider joining IBC. We're also keeping the Debt Recovery Tribunal route open. Ultimately, we’re evaluating all available recovery mechanisms.”