PFC plans to move the National Company Law Tribunal to recover Gensol loans, two people aware of the matter said, adding it may approach the Serious Fraud Investigation Office and the Economic Offences Wing of the Delhi Police as well. Curiously, Gensol’s lenders did not spot the discrepancy earlier, despite the company buying and hypothecating fewer cars than it had borrowed for. The gap was not flagged even a year after lenders transferred the last loan instalment to the company.
Lenders should have known about the discrepancy, two former Gensol directors said on the condition of anonymity.
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“As directors, we only look at the audited financial statements, but the lenders should have known about the status of hypothecation,” one of the former independent directors said. To be sure, four of Gensol’s five independent directors resigned within the last month.
Between FY22 and FY24, Ireda and PFC lent Gensol ₹311.5 crore and ₹352.4 crore, respectively, for buying electric cars. Gensol put up another ₹166 crore of equity capital, bringing the total to ₹829.9 crore. The money was to be used to purchase 6,400 electric cars. However, the company bought only 4,704 cars for ₹567.7 crore, leaving ₹262.1 crore unaccounted for, the interim order of the Securities and Exchange Board of India (Sebi) dated 15 April said.
“There has been a lapse of processes at the lenders’ end,” said Shriram Subramanian, managing director of proxy advisory firm InGovern. “The lenders should have raised the alarm more than a year ago that fewer vehicles have been hypothecated with them.”
“How they failed to do so is a mystery. Whether there was the connivance of Ireda and PFC employees needs to be investigated,” Subramanian added.
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Amarjit Chopra, past president of the Institute of Chartered Accountants of India (ICAI), said the lenders must also be held accountable for the Gensol fiasco.
“The vehicles need to be hypothecated with the lenders. When fewer cars were bought, they clearly would not have been hypothecated, and the lenders would not have basic details like the chassis number for so many cars. How can they be so careless?” Chopra said.
Gensol, Ireda and PFC did not respond to Mint’s queries sent on Friday.
However, two senior PFC officials told Mint on the condition of anonymity that they monitored the trust and retention account (TRA) in which the loan was deposited to ensure that it was transferred to the vehicle dealer—Go-Auto Pvt. Ltd —as intended.
“We have monitored the TRA and seen that the utilization has been done for the intended purpose. So, at least we could not have thought that there might be any diversion,” one of the officials said.
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“I can say that 90% of the amount has been utilized for purchase of vehicles and we have got those hypothecated in our favour also. So, for the balance 10%, we are yet to receive the utilization,” this official said, chalking up the shortfall in the number of vehicles to delays in deliveries.
As per Sebi’s interim order, PFC lent ₹352.4 crore to Gensol in three tranches between FY23 and FY24 to buy electric cars; the last tranche was transferred more than a year ago.
Alongside, Ireda lent ₹311.5 crore to Gensol in six tranches between FY22 and FY23 to buy EVs. It also lent ₹313.9 crore to the company in two tranches in FY24 for its core solar engineering, procurement, and construction (EPC) business.
A PFC official said the lender has sufficient security against its loans to Gensol, including the company’s cars and shares. However, auctioning vehicles would be the last option.
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“There will be many people interested in the fleet of cars. Many operators will be interested. Auction means the value will get reduced. We will explore all the available options,” the second official said. The SFIO would be approached as Gensol allegedly forged documents to show that debt servicing to PFC along with another State-run lender Indian Renewable Energy Development Agency (IREDA) was regular.
M.S. Sahoo, former chairman of the governing body of Insolvency and Bankruptcy Board of India (IBBI) said: “Even a day’s default of over ₹1 crore is enough for a financial creditor to go to NCLT.
