Anmol Singh Jaggi and Puneet Singh Jaggi, once hailed as rising stars in India’s clean energy sector, are now facing serious regulatory action.
The brothers, known for founding Gensol Engineering and BluSmart Mobility, have been barred by the Securities and Exchange Board of India (Sebi) from the securities market allegedly for diverting company funds for personal use.
The case highlights growing concerns around corporate governance in India’s startup ecosystem, where rapid growth has often outpaced regulatory compliance.
As scrutiny intensifies across high-profile startups like BluSmart and Byju’s, investors and regulators are calling for stricter oversight and stronger internal controls.
“Increased regulations and growing compliance failures in companies like Byju’s, and BluSmart Mobility (Gensol) are leading to heightened scrutiny for startups,” said Salman Waris, managing partner at TechLegis Advocates & Solicitors.
“This increased scrutiny has raised compliance costs, directly impacting startups’ financial projections.
"While concerns over compliance and transparency are valid, it’s the startups’ tendency to cut corners that has created the current situation,” added Waris.
Gensol Engineering provides engineering, procurement and construction (EPC) services in the renewable energy sector, with primary focus on solar power projects.
Gensol has grown impressively over the past few years, according to information available on the BSE website.
On a standalone basis, sales of the company have grown from Rs 61 crore in FY17 to Rs 1,152 Crore in FY24.
The trailing 12-month data shows that its sales went up to Rs 1,297 crore.
During the same period, operating profit went up from Rs 2 crore to Rs 209 crore and net profit from Rs 2 crore to Rs 80 crore.
However, Sebi began investigating Gensol after receiving a complaint in June 2024 alleging share price manipulation and fund diversion.
“The prima facie findings have shown misutilisation 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,” said a Sebi interim order.
It added, “The company has attempted to mislead Sebi, credit rating agencies, lenders and investors by submitting forged conduct letters purportedly issued by its lenders.”
Sebi has accused the Jaggi brothers of misusing around Rs 262 crore of the Rs 977.75 crore loan obtained for EV procurement.
These funds were allegedly diverted through complex transactions and spent on various items.
They include a luxury apartment in DLF Camellias (Rs 42.94 crore), an investment in Ashneer Grover's Third Unicorn (Rs 50 lakh), personal expenses like a golf set (Rs 26 lakh), foreign currency purchases, and significant transfers to family members.
This may have an impact on electric ride-hailing startup BluSmart, which has reportedly halted ride bookings in parts of Delhi-NCR, Mumbai, and Bengaluru.
This has raised concerns about its future.
Though the app remains on the Play Store, ride scheduling has been disabled, suggesting a pause in operations.
The situation is further strained by the recent exits of BluSmart’s top leadership, signalling deepening troubles.
Brijesh Damodaran, managing partner at Auxano Capital, noted that startups often operate in legal grey areas due to evolving or inconsistently enforced regulations.
“The ‘growth at all cost’ mindset does lead to a miss on risk management, internal controls, or regulatory engagement, until problems emerge,” said Damodaran.
“By contrast, traditional firms tend to build robust compliance systems over time and have more experience dealing with regulatory bodies,” he said.
Abhishek Prasad, managing partner at Cornerstone Ventures, said startups often disrupt traditional models by introducing new ways of doing business — through digitisation, AI-driven decisions, or connecting untapped buyers and suppliers.
This level of innovation brings higher risks. Regulators must stay alert and adapt frameworks to reduce the impact of failed experiments.
“Clearly in a world where data protection and privacy concerns are constantly rising, such risks are becoming even more relevant,” said Prasad.
He added, “Consequently, this situation tends to be perceived as over-regulation, as there is a constant need for regulatory frameworks to be modified to cover broader risks to consumers and the economy.”
He said some of these startups become hyper-growth behemoths, completely disrupting an industry such as fintech, healthcare, edtech, or others.
For instance, Byju's has faced a multitude of compliance issues, primarily revolving around financial reporting and corporate governance.
The company has been under scrutiny for delayed filing of audited financial statements.
This led to the resignation of two auditors, Deloitte and BDO, due to concerns over transparency and financial irregularities.
Regulatory bodies like the Ministry of Corporate Affairs have investigated Byju's for potential financial misreporting and fund diversion, revealing lapses in corporate governance, including lack of transparency in acquisitions and delayed board meetings.
Additionally, Byju's has faced allegations of aggressive sales tactics, unethical practices in leveraging loans to customers, and a toxic work culture.
This drew criticism from the public and saw regulatory attention, impacting the overall credibility of the edtech sector.
Once valued at $22 billion, Byju’s is now worth zero. It faced regulatory troubles and a $1 billion dispute with US lenders that pushed it towards insolvency.
While some parts of the fintech sector are not directly regulated by the RBI, the banking regulator has been increasing its scrutiny on the industry in the past few years.
It also identified a self-regulatory organisation for the fintech sector (SRO-FT) in the form of the Fintech Association for Consumer Empowerment (FACE) to act as a bridge between players and the regulator.
In October 2024, RBI imposed sanctions on Flipkart co-founder Sachin Bansal’s Navi Finserv, DMI Finance, Asirvad Microfinance, and Arohan Financial Services.
The regulator removed restrictions on Navi in December the same year and on DMI Finance, Arohan Financial Services, and Asirvad Microfinance in January this year.
The regulator acted against entities following concerns such as usurious pricing, non-compliance with regulatory guidelines on assessing household income and considering borrowers’ existing and proposed monthly repayment obligations.
In January 2024, the RBI barred Paytm Payments Bank from conducting most of its operations, including deposit-taking and fund transfers over several instances of non-compliance and continued material supervisory concerns.
Violations of know-your-customer (KYC) norms, concerns around not maintaining arm’s length with promoter group One97 Communications (OCL) and not disclosing payments to promoters, among others, may have caused the crackdown on the payments bank.
In January 2023, investors of GoMechanic flagged accounting irregularities at the car servicing startup.
It then decided to lay off 70 per cent of its workforce as it struggled to raise fresh funds.
At that time, it became one among the three Sequoia-backed startups in over a year, after Singapore-based Zilingo and fintech unicorn BharatPe, to report financial irregularities.
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