After SEBI, ED launches simultaneous probe into Gensol Engineering, BluSmart
What's the story
Gensol Engineering and BluSmart are being investigated by Securities and Exchange Board of India (SEBI) and the Ministry of Corporate Affairs (MCA).
Now, the Enforcement Directorate (ED) will also examine possible money laundering at the duo, as per CNBC-TV18.
The probe comes after the ED froze shares in Gensol Engineering, owned by an individual linked to Mahadev online betting app case.
Meanwhile, the MCA has launched a separate probe into alleged irregularities at Gensol Electric, a subsidiary of Gensol Engineering.
Inquiry
MCA's investigation into Gensol Electric
The MCA's inquiry will look into Gensol Electric's regulatory filings, accounts, as well as compliance history. The ministry has not given a deadline for this investigation. Any possible repercussions will depend on the outcome of this probe.
Interconnected
BluSmart's connection to Gensol's troubles
The challenges faced by Gensol are closely tied to those of BluSmart, an electric cab service co-founded by Anmol Singh Jaggi.
Jaggi was recently barred from accessing the securities market over alleged misuse of investor funds.
Reports suggested that funds raised by Gensol from a Qualified Institutional Placement (QIP) were allegedly used for personal expenses, like buying a luxury apartment instead of purchasing electric vehicles for BluSmart as planned.
Regulatory actions
SEBI's ban on Jaggi and BluSmart's suspension
The SEBI's ban on Jaggi has resulted in the suspension of BluSmart's ride-hailing services across several places, including the national capital region.
Not to mention, even the customer wallets on the app have been frozen.
This comes as a major setback for BluSmart, which was once considered a green alternative to the likes of Ola and Uber.
Governance review
MCA's preliminary assessment and possible formal investigation
The MCA is conducting a preliminary assessment of corporate governance issues in these companies. If the initial evaluation indicates governance problems, a formal investigation may be initiated.
The ministry aims to find out whether there were any fund diversions for personal expenses of the promoters, like buying luxury apartments or transferring funds to relatives.
The final decision from the MCA is expected in two weeks.