The Ministry of Corporate Affairs (MCA) has launched an investigation into Gensol Engineering and BluSmart Mobility for alleged violations of the Companies Act. The ICAI will review their financial statements over the next six months.
SEBI: India's Ministry of Corporate Affairs has ordered an investigation into Gensol Engineering and BluSmart Mobility for alleged violations of the Companies Act, 2013. The Ministry has directed a thorough investigation into these companies' affairs, accusing them of violating various provisions of the Companies Act. Officials confirmed this on Tuesday.
Allegations Against Gensol Engineering
Gensol Engineering is accused of its promoters misappropriating loan amounts from the publicly listed company for personal use. This has raised serious concerns about the company's operational practices and financial misconduct. The Securities and Exchange Board of India (SEBI) issued an order in April, banning the company's promoters, Anmol Singh Jaggi and Puneet Singh Jaggi, from the securities market due to various violations.
Following SEBI's order, the Ministry of Corporate Affairs planned appropriate action. The Ministry ordered an investigation into the companies' affairs under Section 210 of the Companies Act 2013. This section empowers the Ministry to order an inquiry into any company's affairs, especially when it involves public interest.
Investigation into BluSmart Mobility
BluSmart Mobility, also promoted by Anmol Singh Jaggi, is also under scrutiny. Although primarily a ride-hailing service provider, this company's financial statements will also be examined.
ICAI's Review of Financial Statements
Meanwhile, the Institute of Chartered Accountants of India (ICAI) has decided to review the financial statements of Gensol Engineering and BluSmart Mobility. The ICAI's Financial Reporting Review Board (FRRB) is examining the financial statements of both companies for the fiscal year 2023-24. This process will ensure compliance with accounting standards, auditing standards, and provisions of the Companies Act.
Furthermore, the FRRB will assess compliance with guidelines and circulars issued by the Reserve Bank of India (RBI) regarding accounting and auditing. This review process is expected to be completed within the next six months.
Consequences of Irregularities
If the investigation finds any significant accounting irregularities in the financial statements of Gensol Engineering and BluSmart Mobility, the matter will be referred to the ICAI's director of discipline for further investigation. The relevant regulatory authorities will also be informed to take appropriate action.
Companies Act and SEBI Order
The Ministry had previously stated that it would take action against these companies only after reviewing the SEBI order. SEBI's April order accused the company's promoters of misappropriating loan amounts for personal use, raising questions about corporate governance and financial irregularities. The Ministry has now initiated an investigation into Gensol Engineering's affairs, following SEBI's order.
