ICAI To Review Gensol Engineering, BluSmart Mobility Financial Reports Amid Fraud Allegations

The Institute of Chartered Accountants of India (ICAI) has announced plans to examine the FY24 financial statements and statutory audit reports of Gensol Engineering and its related party BluSmart Mobility following allegations of financial misconduct, according to ICAI president Charanjot Singh Nanda, says a report by ET Auto.

In a statement to the publication, Nanda confirmed this marks the second case -- after IndusInd Bank -- that ICAI's Financial Reporting Review Board (FRRB) has independently initiated in just over a month, demonstrating the regulatory body's proactive approach toward enhancing auditor accountability.

Likely Disciplinary Action Ahead

Should the FRRB investigation determine that the financial statements fail to present a "true and fair" view of the companies' finances, the matter could be escalated to ICAI's disciplinary committee for potential action against the auditors involved.

Market Regulator's Intervention

This development follows last week's action by the Securities and Exchange Board of India (SEBI), which prohibited Gensol's promoters -- brothers Anmol and Puneet Jaggi -- from accessing stock markets and ordered a forensic investigation into their listed renewable energy company.

SEBI's interim report highlighted concerns about fund diversion by the Jaggi brothers and governance deficiencies within the company. The brothers stand accused of misappropriating term loans obtained by Gensol from state-run Indian Renewable Energy Development Agency (IREDA) and Power Finance Corporation (PFC).

Since SEBI's interim findings became public, Gensol's stock has plummeted by over 22 percent. Shares closed at Rs 100.80 on the BSE on Wednesday.

According to the market regulator's findings, Gensol had secured loans totalling Rs 977.75 crore, with Rs 663.89 crore specifically designated for purchasing 6,400 electric vehicles (EVs). These vehicles were intended for lease to BluSmart, a related party. However, Gensol acknowledged in its February response to SEBI that it had acquired only 4,704 EVs.