PFC declares Gensol as fraud, to approach NCLT if recovery falls short

State-run Power Finance Corp. has declared its loan exposure to Gensol Engineering Ltd as fraud after its preliminary findings and has fully provided for the loan amount, according to Parminder Chopra, chairman and managing director. 

In her media briefing, Chopra said that the lender has realised ₹44 crore by way of security encashment of fixed deposits and the trust and retention account (TRA), in which the loan was deposited, in the fourth quarter, taking the outstanding loan amount to ₹263 crore.  

“Based on the preliminary inquiry, we have considered it as fraud and provided for 100% because there are no overdue in the case of PFC,” said Chopra. “I would like to mention that this is a promoter-specific event and we do not see representing sectoral risk. This project does not reflect upon PFC's appraisal methodology nor the risk mitigation strategies adopted by PFC. I would like to reiterate that NPAs (non-performing assets) are a normal business risk for any financial institution," she added.

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PFC had disbursed ₹352 crore to Gensol for leasing 3,000 electric vehicles. It also clarified that 2,741 vehicles have been delivered and hypothecated.  

Chopra added that the lender will consider recovery options through the insolvency and bankruptcy process if it falls short of recovery through other methods. That said, she assured that all options, including recovering through the debt recovery tribunal (DRT), are on the table. The other lender, the Indian Renewable Energy Development Agency (Ireda), has already dragged the troubled company to the National Company Law Tribunal (NCLT).  

“If the recovery is short, then we can join IBC. It all depends on that, let the case be admitted,” said Chopra.  

Q4 profit jumps, KSK dues cleared

PFC saw a 23.5% rise in net profit to ₹5,109 crore at the end of March owing to higher net interest income and bad loan recovery. Net profit stood at ₹4,135 crore during the corresponding period last year. Net interest income or core income stood at ₹5,910 crore at the end of March as compared to ₹4,236 crore during the corresponding period last year. Net interest margin (NIM) stood at 3.64% at the end of FY2025 as compared to 3.46% last year. 

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The power financier saw 100% recovery of its outstanding exposure of ₹3,300 crore from JSW Energy’s acquisition of KSK Mahanadi Power. The NBFC will see recoveries from two other NCLT assets, including Sinnar Thermal Power and India Power Corporation (Haldia). It is also expecting the resolution of two assets—Shiga and TRN Energy—outside NCLT. 

PFC’s loans grew by 12.8% year on year to ₹5.43 trillion at the end of March 2025. Renewable loan book stood at ₹81,031 crore. PFC has, however, reduced its loan growth target for FY26 to 10-11% from 12-15% earlier.   

Last month, in an interim order, the capital markets regulator Securities and Exchange Board of India (Sebi) barred Gensol Engineering and promoters—Anmol Singh Jaggi and Puneet Singh Jaggi—from the securities markets till further orders in a fund diversion and governance lapses case.

On 12 May, the Jaggi brothers resigned from the company following market regulator Sebi's interim order, according to an exchange filing.

Anmol Singh Jaggi was the managing director, while Puneet Singh Jaggi was a Whole-time Director.

In its order on 15 April, Sebi debarred the Jaggi brothers from holding the position of director or key managerial personnel in Gensol until further orders.

The order came after the regulator received a complaint in June 2024 relating to the manipulation of share price and diversion of funds from GEL and thereafter started examining the matter.

In the 29-page order, Sebi had said, "The prima facie findings have shown mis-utilisation and diversion of funds of the company (GEL) in a fraudulent manner by its promoter directors, Anmol Singh Jaggi and Puneet Singh Jaggi, who are also the direct beneficiaries of the diverted funds".

Gensol Engineering's promoters treated the listed company as a proprietary firm, diverting corporate funds to buy a high-end apartment in The Camellias, DLF Gurgaon, splurging on a luxury golf set, paying off credit cards, and transferring money to close relatives, Sebi said in its interim order. 

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