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S Ravi, former chairman of the Bombay Stock Exchange (BSE), expressed deep concern over the recent allegations surrounding BluSmart, adding that such incidents will damage investor trust and tarnish the broader perception of the startups.
S Ravi (Sethurathnam Ravi), the former BSE chairman and founder of Ravi Rajan & Co, warned that such actions could shake the confidence of investors in the new ventures and tarnish the credibility of even the well-established startups. Recently, market regulator Securities and Exchange Board of India (SEBI) flagged issues related to alleged fund diversion and document falsification against Gensol Engineering Ltd, which impacted BluSmart, leading to the closure of services of the company. Anmol Singh Jaggi along with his brother Puneet Singh Jaggi are the co-founders of BluSmart and directors at Gensol Engineering, an Ahmedabad-based solar engineering and services firm. Both have stepped down from the post of directors after the SEBI notice. "It is not good for two reasons. Once the new investors, new companies will come there, these people (Investors) wont start funding them at all, (They will) stop funding. They'll feel that the startups are only personal gains and valuations, so it's not a good, thing at all," former BSE chairman said. "The second from a very good brand because BluSmart is not a very small brand because it's very well built. They demolished it...they demolished it for personal gains. They would have made their money, but you know this shortcut is not right," the former BSE chairman added. Former BSE chairman highlighted that there were allegations of insider trading as well as mismanagement and fund diversion. By definition, insider trading is buying or selling a company's stocks using confidential, non-public information. "There were two trigger points. First of all, the pricing which happened of the share. There were a lot of complaints about insider trading. Second, there was a vision blower, and there were complaints against this company. SEBI went into an investigation and gave an interim order. In the interim order, they found certain deficiencies. The deficiencies came out in that order, which was diversion of funds. Second point that came out was a misstatement," he added. Going forward, Ravi suggested that startups and the promotors should communicate more and make more honest disclosures to stop such incidents. "The startup community must start communicating now with all the lenders and stakeholders and show confidence that they are all working together in a good governance structure," he added. Talking about the roles of independent directors and auditors, he asserted that promotors should provide accurate information for better disclosures. (ANI)
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