Latest news with #Gensol-BluSmart
Mint
01-05-2025
- Business
- Mint
Non-executive directors needn't get caught up in cases of corporate fraud
The Gensol-BluSmart crisis has drawn corporate fraud in India's startup ecosystem into the spotlight. It has sparked a debate over a 'fake it till you make it' culture and whether it's driven by sheer greed, naive optimism or intense pressure to keep the company's stock on an ever-rising curve. While the causes remain debatable, the consequences of corporate fraud follow a predictable path. Once discovered, law enforcement agencies and regulatory bodies spring into action. Probes are launched, notices are dispatched and litigation ensues. One may expect these proceedings to target executive directors, who are responsible for running the business and its affairs. But that is not the case. They invariably implicate all board members, including those who serve in non-executive roles, such as nominee directors appointed by private equity firms. This occurs despite the stark difference between the roles of executive and non-executive directors. The latter play a limited role on the board. They represent the shareholders that nominate them. As their involvement is usually restricted to attending board meetings, they often have no clue, let alone knowledge, of any fraud. Nonetheless, they find themselves arrayed with those accused of carrying out the fraud . Noticing this, the ministry of corporate affairs (MCA) came out with a circular dated 2 March 2020, drawing attention to a provision in the Companies Act of 2013. This provision limits the liability of non-executive directors to wrongful acts that occur with their knowledge (attributable through board processes), consent or connivance, or where they do not act diligently. In the light of this, the MCA required that the specified criteria be satisfied before non-executive directors are arrayed in any civil or criminal case under the Companies Act. The MCA also instructed registrars of companies (RoCs) to ensure that sufficient evidence exists of their involvement before proceeding against them. To comply with the law's mandate and avoid liability, non-executive directors can take preventive measures. First , it is crucial for them to demonstrate that they acted diligently. This involves dedicating adequate time and attention to the company's issues, especially those that may raise red flags. They must remain sceptical of management actions until they independently evaluate them. Rather than accepting rosy narratives or optimistic portrayals, they should pose incisive questions to discern the true picture of the company's operations. Second , non-executive directors must act decisively upon detecting signs of corporate wrongdoing by notifying management and insisting on prompt corrective action. Problems arise when, instead of confronting the management, they succumb to pressure, overlook fraudulent conduct in fear of repercussions or dismiss it as an isolated incident. Such responses are not prudent, and by the time this realization dawns, it is often too late. They risk being accused of negligence or wilful blindness, as they can be presumed to possess constructive knowledge. Non-executive directors must speak up if they detect signs of fraudulent activity, as their silence can be used against them. Third , non-executive directors must keep a record of any instances of having highlighted red flags. Should these concerns pertain to an issue being addressed through a board or shareholder resolution, they must ensure their dissent is noted and accurately recorded in the meeting minutes. Plus, any correspondence with management should be preserved as evidence. By taking these steps, non-executive directors can shield themselves from liability should a fraud be eventually uncovered. However, the reality is that they are only able to escape punishment, not the process. They still get caught in the crossfire between regulatory bodies and the fraud's perpetrators. These bodies may include the Securities and Exchange Board of India for listed companies and Reserve Bank of India for banks and financial institutions. Non-executive directors could also get embroiled in civil and criminal proceedings pursued by various agencies such as the local police, Enforcement Directorate and Serious Fraud Investigation Office. Even if the charges levelled against non-executive directors lack evidence or merit, they are forced to endure arduous and lengthy proceedings before they can be exonerated. This process can be extremely taxing; they incur litigation costs, face inconvenience, undergo stress and suffer reputational harm. They may even need to resign from their board positions in other companies, especially those which operate in tightly regulated sectors. This is because, in many such sectors, maintaining a 'fit and proper' status is essential for directors. At the end, the real question that needs to be answered is whether it is possible to shield non-executive directors from this ordeal without neglecting evidence that may point to their involvement. This is precisely what the MCA circular aims to address. By adopting a balanced approach, it sanctions the prosecution of non-executive directors only in cases where there is prima facie evidence of their participation. Rather than indiscriminately implicating all board members, it calls for an initial assessment before tagging them with executive directors. The need of the hour is for regulatory bodies and enforcement agencies to embrace the circular's intent and enforce it in letter and spirit. These are the authors' personal views. The authors are, respectively, head of the private equity and financial services regulatory practice; and member, private equity and M&A, at Nishith Desai Associates.
Time of India
24-04-2025
- Business
- Time of India
Audit shadows BluSmart's books; Zomato leadership rejig
Audit shadows BluSmart's books; Zomato leadership rejig Also in the letter: BluSmart faces forensic audit amid Gensol crisis; investor payments in jeopardy Getting into action: Massive burn: Worried investors: Read ETtech's in-depth coverage of the Gensol-BluSmart crisis: Zomato food delivery CEO steps down; Deepinder Goyal to take charge Tell me more: Backdrop: Also Read: What's next: Why it matters: Also Read: IT firms may need to up hiring to retain edge as GCCs come fishing Numberwise: GCC growth has pushed IT services attrition to 16%. Greenfield GCCs hired 110,000 people in 2024, up from 60,000 in 2023, with over half coming from IT firms, according to data from Xpheno. GCCs hired nearly ten times more talent than Indian IT majors in 2024-25, driving 20-25% lateral movement, said Quess. About 40% of IT companies are now adopting remote and hybrid models to access talent in tier-2 cities and overseas, TeamLease said. Experts take: 'IT services firms have no choice but to refill these attrited resources because they are billable and directly impact revenues,' said Kamal Karanth, cofounder of Xpheno. This explains why TCS plans to hire 40,000 freshers this fiscal year and Infosys 20,000. Experts added that both companies are aiming to reduce subcontractor costs, which have already fallen by 11% over the past eight quarters. HCLTech will increase fresher hiring in FY26, aiming to recruit 2,000–3,000 candidates each quarter, said chief people officer Ramachandran Sundararajan. The company hired 7,000 freshers in FY25. Tell me more: GCCs are attracting top talent with better pay and faster career growth, said Karthikeyan K, director – permanent recruitment at Adecco. Over 30% of exits from large IT firms are to GCCs, where the cost of an unfilled seat is 40% higher. Junior and mid-level professionals receive quicker salary increases when they move to GCCs. 'The average tech salary has crossed Rs 18 lakh per annum, with GCCs offering 10-15% higher pay for senior roles,' he added. Also Read: Donald Trump's big varsity shake up opens doors for Indian edtech companies Partnership opportunities: Why now: Moving away from the US: US universities are expected to attract more international students, who are key revenue contributors—potentially benefiting study-abroad startups. However, an executive said studying abroad, especially in the US, has become difficult for Indian students due to rising tuition fees, visa uncertainties, and the weakening rupee against the dollar. Other Top Stories By Our Reporters Secondaries specialist PixelSky Capital launches Rs 400 crore late-stage fund: Sarvam and three other AI firms in MeitY's LLM build out first shortlist: Promoters, early backers of Ather Energy eye strong gains through IPO: LTIMindtree's Q4 net profit up 2.5%: Global Picks We Are Reading Happy Thursday! BluSmart's board has engaged consultancy firm Grant Thorntonto conduct a forensic audit of the ride-hailing startup's financials. This and more in today's ETtech Morning Dispatch.■ GCCs trigger talent shift■ Indian edtech's Trump bet■ PixelSky's first closeWith associate entity Gensol under regulatory scrutiny, BluSmart, the ride-hailing startup, is also coming under the scanner. Sources tell us that the company's board has initiated a forensic audit to be conducted by consultancy firm Grant audit will investigate whether funds were diverted from the company to Gensol Engineering, the solar consulting firm under Sebi's scrutiny. Last year, BluSmart's management informed investors that it had around Rs 400 to 500 crore in cash reserves. However, sources told us that the company ran out of funds just months financial troubles have deepened, with debt mounting and business growth stagnating. The company posted losses of Rs 470 crore in FY24 and is burning up to Rs 50 crore each month in FY25, people in the know told us. While its revenues grew by about 58% between FY23 and FY24, losses more than doubled over the same crisis at Gensol has now spilled over to BluSmart, the group's ride-hailing venture. Investors fear the ongoing forensic audit could jeopardise repayments due in the coming months. If fund diversion from BluSmart is confirmed, it could trigger a painful liquidation or legal proceedings — putting many individual investors at risk of losing their Goyal, CEO, ZomatoIn a major top-deck reshuffle at Zomato's parent entity Eternal, the company's chief executive of food delivery Rakesh Ranjan is stepping down from his role Eternal CEO Deepinder Goyal will be assuming Ranjan's responsibilities while the company scouts for a full-time replacement. Sources told ETtech both internal and external candidates are being move comes as Zomato battles a slowdown in its mainline food delivery business, even during the festive-heavy December quarter. Its rival Swiggy caught up on market share, riding the 10-minute delivery company is scouting for a full-time replacement, with both internal and external candidates under consideration. For now, Ranjan will continue with the company in a different delivery is Zomato's biggest revenue engine—and the leadership reset underscores the pressure to maintain growth in a cooling demand the uncertain economic environment, IT services firms may need to step up hiring in the long term to prevent talent from shifting to global capability centres (GCCs), experts the Donald Trump administration slashes billions of dollars of federal funding for US universities, Indian edtech platforms—particularly those focused on higher education and study abroad—are reassessing how this shift could bolster their businesses , founders and executives told ET.'We are starting to see greater interest from our university partners. They're looking for ways to manage the funding crunch they're facing,' said Ashwin Damera, founder and chief executive of Eruditus. He added, 'Universities will launch more courses with us. They need to find more ways to generate revenue.'The Trump administration has already taken action against seven universities, including Brown, Cornell, Harvard and Columbia, by either cutting funding or issuing warnings about potential cuts. This follows Trump's allegation that some top universities have become hubs of antisemitism and political Ahuja, managing partner, PixelSky CapitalPixelSky Capital, a secondary-focused fund set up by IndigoEdge and entrepreneur Hitesh Ahuja, has launched its debut investment vehicle with a target corpus of Rs 400 crore to back late-stage tech and consumer companies, according to Sarvam AI, along with Soket AI Labs, and is likely among the first companies selected by the IT ministry to receive incentives under the Rs 10,000-crore IndiaAI Mission, aimed at developing frontier AI models, sources and early investors in Ather Energy are poised for substantial gains as the electric two-wheeler maker gears up for its initial public offering (IPO) later this the IT services arm of the L&T Group, reported a modest 2.5% year-on-year increase in Q4 net profit to Rs 1,129 crore, with forex gains partially cushioning other operational pressures.■ China has an army of robots on its side in the tariff war ( The New York Times ■ What would a US tariff on chips look like? ( FT ■ Nvidia thinks it has a better way of building AI agents ( WSJ
Time of India
23-04-2025
- Business
- Time of India
BluSmart faces audit; More on Ather IPO
BluSmart faces audit; More on Ather IPO Also in the letter: BluSmart board has appointed Grant Thornton to conduct forensic audit of company's books: Sources Quote, unquote: Cause and effect: Cutting down: The brothers, their mother Jasminder Kaur, and promoter group Gensol Ventures have lost 57% of their stake since December 31. As of December 2024, the promoters held 2.8 crore shares, or 62.6% of Gensol, with 81.7% pledged. By end-March, their holdings dropped to 35.9%, with 95% pledged. By April 22, creditors had seized an additional 9.2%, leaving them with 26.7%. Market reacts: Read ETtech's in-depth coverage of the Gensol-BluSmart crisis: Promoters, early backers of Ather Energy eye strong gains through IPO Tell me more: Tiger Global, which backed the company in 2015 at Rs 38.58 per share, is set to exit with an 8.3x return. Singapore-based GIC and India's National Investment and Infrastructure Fund (NIIF), which invested in 2022, are expected to earn multiples of 1.57x and 1.75x, respectively. OFS play: Founders Tarun Mehta and Swapnil Jain will each offload shares worth Rs 31.4 crore. Other selling shareholders include Tiger Global (Rs 12.84 crore), GIC (Rs 192.71 crore), NIIF (Rs 84.57 crore), and IIT Madras (Rs 1.13 crore). Issue downsizing: Capex plan: OpenAI signals interest in buying Google's Chrome if breakup is ordered: ChatGPT exec testifies Context setting: Judge Amit Mehta ruled last year that Google holds a monopoly in online search and advertising. US government attorneys argue that the rise of AI could entrench Google's dominance in search. The case also scrutinises Google's agreements with companies like Apple and Samsung to keep its search engine as the default option. What else: Intel to cut over 20% of workforce: Reports Also Read: Finally, deals back on the menu for QSRs, cafe chains Deal instances: Homegrown brands such as Mad Over Donuts, Biggies Burger, and Theobroma are close to securing fresh funding from private equity firms and family offices. Devyani International, the operator of global fast-food chains KFC, Pizza Hut and Costa Coffee, is acquiring a majority stake in Sky Gate Hospitality, the parent company of Biryani By Kilo. Wow! Momo recently raised Rs 150 crore from Haldiram's Kamal Agrawal and Malaysia's sovereign wealth fund Khazanah Nasional. Nothing Before Coffee, a café chain focused on India's tier-2 cities, raised $2.3 million in a funding round led by Prath Ventures. Expert take: Chart-ed: AI roles fetch up to 40% more pay as GCCs open purse strings BluSmart's board has appointed Grant Thornton to audit the cash-strapped company's financials. This and more in today's ETtech Top 5.■ OpenAI eyes Google Chrome■ Deal activity up in QSRs■ Chart-ed: AI roles pay moreThe board of embattled BluSmart has initiated a forensic audit of the company's books after whistleblower complaints alleging financial fraud. The company has engaged Grant Thornton for the probe, sources told us.'The company's management had told its investors when it launched its fundraising discussions last year that it had Rs 400-500 crore in cash on its books. However, only a few months later, it was running out of cash,' a person in the know said. 'Investors are questioning where the money went.'The audit follows regulatory action against Gensol Engineering, a listed firm promoted by BluSmart cofounders Anmol and Puneet Singh which was burning through Rs 20 crore each month, failed to close its $50 million funding round and suspended its ride-hailing services earlier this the Jaggi brothers' shareholding has dropped sharply amid ongoing probes by enforcement of the listed engineering, procurement and construction (EPC) firm have hit the 5% lower circuit since Wednesday's market open, falling over 80% since March 3 when credit downgrades Mehta, cofounder and CEO, Ather EnergyPromoters and early investors in Ather Energy are poised for substantial gains as the electric two-wheeler maker prepares for its public listing later this Energy has reduced its IPO size from Rs 3,100 crore to Rs 2,981 crore . According to Ashish Nigam, managing director at Axis Capital, the majority of this reduction stems from a lower offer for sale (OFS) component. Several shareholders chose to stay on, buoyed by Ather's recent performance and growth prospects, he Tarun Mehta said the company will focus its capital on product innovation, technology development, and brand building. Ather will avoid investing in asset-heavy areas such as cell-manufacturing and semiconductors, which he described as 'highly volatile and subject to rapid technological changes.' He added, 'We believe suppliers are in a better position to handle that kind of volatility.'ChatGPT's head of product, Nick Turley, revealed that OpenAI would be interested in acquiring Google's Chrome browser should the tech giant be forced to sell it as part of an ongoing antitrust also disclosed that OpenAI had approached Google about integrating its search technology into ChatGPT's AI assistant, but the request was plans to lay off more than 20% of its staff in a sweeping move to streamline operations and refocus on engineering, according to a Bloomberg cuts mark the first major decision under new CEO Lip-Bu Tan, who has criticised the company's sluggish, bloated middle quick-service restaurant (QSR) and café sector is witnessing a resurgence in deal activity after a lull lasting five consecutive quarters The sector's growth has been driven by low-cost operating models, value-for-money pricing, and evolving consumer behaviour, said Sagar Daryani, president of the National Restaurant Association of India (NRAI). This, he added, is reinforced by people ordering in, choosing OTT platforms over cinemas, and preferring house parties to going for GenAI skills is rising rapidly in India's global capability centres (GCCs), increasing by 32% year-on-year in 2024 Early adoption in sectors such as BFSI, retail, and tech is driving this trend, according to a report by Quess. Positions in AI and data science now offer salaries that are 25–40% higher than those for traditional software engineers.
Time of India
21-04-2025
- Business
- Time of India
Next in Gensol crisis; No-go for China in India's electronics
Next in Gensol crisis; No-go for China in India's electronics Also in the letter: PFC, IREDA mull sale of Gensol EVs to secure loans The details: Gensol is linked to BluSmart, which began scaling back operations on April 17. Sources said Gensol serviced its loans using lease payments from BluSmart. With those payments halted, loan repayments are at risk. The lenders are drawing up a list of potential EV buyers. In early March, credit rating agencies downgraded Gensol's debt to D or 'status of default'. Not just that: Troubles on: Last ditch: Transitioning fleet operations to Uber to improve trip volumes and unit economics. Raising $6.8 million in bridge funding from BP Ventures. Selling assets to climate-focused private equity firm Eversource Capital in exchange for fresh capital. Read ETtech's in-depth covering of the Gensol-BluSmart crisis: Tech-for-stake: 10% cap likely for Chinese firms in electronics JVs What's happening: Tell me more: Govt's POV: A third of our code will be written by AI by 2025-end: Data security unicorn Druva CEO Quote, unquote: What's coming: The big picture: OpenAI's Sam Altman said AI already handles over 50% of coding tasks in some companies, and the demand for software engineers will soon decline. Zoho's Sridhar Vembu believes AI could take over 90% of coding tasks. Meta CEO Mark Zuckerberg told Joe Rogan that AI will automate mid-level engineering roles this year. Salesforce has decided not to hire any software engineers in 2025, citing productivity gains from AI. On a more cautious note, Bill Gates said AI will replace many jobs, but software development may not be the first to do so. More CEOs eye exit as going gets tough, options spring up The numbers: In 2024-25, 141 managing directors (MDs) or chief executive officers (CEOs) departed from 2,590 NSE-listed firms. This compares with 119 exits across 2,279 companies in 2023-24 and 133 exits across 1,994 companies in 2022-23. Why it's happening: New opportunities and talent shortage: A surge in job openings and a shortage of skilled leadership are prompting more CEOs and MDs to leave. A surge in job openings and a shortage of skilled leadership are prompting more CEOs and MDs to leave. Heightened scrutiny & high expectations: Boards and shareholders are turning up the heat, showing little tolerance for underperformance or missed targets. Boards and shareholders are turning up the heat, showing little tolerance for underperformance or missed targets. Rising salaries: CEO pay packages in India are catching up with global benchmarks, which means companies are quicker to replace leaders who fail to deliver. Chart-ed: Biggest data centres in the world Lenders to Gensol are getting jittery as the company's troubles compound. This and more in today's ETtech Top 5.■ Automation in writing code■ More CEOs eye exit in 2025■ Chart-ed: Biggest data centresPower Finance Corporation (PFC) and the Indian Renewable Energy Development Agency (IREDA) are planning to auction electric vehicles (EVs) acquired by Gensol to recover dues on loans extended to the company. These EVs were later leased to two public sector lenders financed the purchase of over 5,000 EVs but are now concerned that Gensol's loans could turn into non-performing assets (NPAs) amid mounting regulatory pressure. ET reported on April 21 that investors in BluSmart Mobility's bonds may invoke an 'Event of Default' clause, demanding immediate repayment. BluSmart had raised over Rs 100 crore via non-convertible debentures (or corporate bonds), subscribed to by high-net-worth individuals and some retail has barred BluSmart's founder brothers, Anmol and Puneet Jaggi, from accessing capital markets. In an interim order , it cited fund diversion, stock manipulation, and insider trading. The duo has 21 days to before the storm hit Gensol (and BluSmart), Anmol Jaggi proposed strategic changes at BluSmart to shareholders. In an April 15 email , which ET has reviewed, Jaggi suggested three alternatives:India is weighing a proposal to cap Chinese equity in electronics joint ventures at 10%, and only if the deal includes a technology transfer US-China trade tensions, Chinese firms are increasingly willing to accept stricter conditions to retain access to the Indian market — a vital opportunity as US tariffs risk pricing their products out of American Indian government is more open to allowing equity stakes from Chinese contract manufacturers and supply chain partners than consumer-facing brands as it seeks to nurture a self-reliant electronics manufacturing exceptions may apply for US or European companies relocating production from China to India. In such cases, Chinese suppliers could be allowed up to a 49% stake — but only under clearly defined remains wary about China's long-term strategic goals despite recent signs of cooperation. Officials have repeatedly flagged concerns over critical supply bottlenecks in three areas: drilling machinery, equipment for manufacturing solar panels, and to avoid overdependence on Chinese investment, a concern underscored by Vietnam's experience, the government is determined to maintain its control over the electronics founder and CEO Jaspreet SinghJaspreet Singh, founder and chief executive of data security unicorn Druva, expects artificial intelligence (AI) to generate about a third of the company's code by the end of 2025, reflecting a broader industry shift.'We have been experimenting with AI internally to see how it can be used to make it more productive. We also see use cases, like engineering. If not half, at least a third of our code will be written by AI by the end of this year," Singh told ET in an interaction.'It will be a threat for new coders coming into the system, I'll be lying if I say otherwise. But what is irreplaceable for now is domain experience: how data works, how its security works,' Singh added. He also noted that AI-driven efficiency will likely dampen hiring in the coming is reshaping how software is built, with startups and Big Tech acknowledging its increasing role in exits are rising across India in 2025 , with 41 top executives stepping down from NSE-listed companies in the March quarter—up sharply from 23 during the same period last chart highlights the world's largest data centre markets in 2024, ranked by installed capacity (in gigawatts or GW). Northern Virginia tops the list with 6.98 GW, followed by major hubs such as Beijing, Chicago, Singapore, and Shanghai. The chart also shows the share of capacity under construction, again led by Northern Virginia, which has 5.38% of its total capacity in the pipeline.
