The family that founded one of India’s leading electric cab booking services has been hit with allegations of misappropriation of loan funds by the country’s market regulator.
BluSmart has emerged as a strong disruptor in a market dominated by Uber and its local rival Ola, providing a climate-friendly alternative in most major Indian cities.
But now Anmol Singh Jaggi and Puneet Singh Jaggi, the founders of its holding company Gensol Engineering, have been accused of misusing nearly Rs 2.6bn (£23m) out of a loan for Rs 9.8bn (£85.9m) from the state-run Indian Renewable Energy Development Agency (Ireda) and Power Finance Corporation (PFC).
The Securities and Exchange Board of India (Sebi) issued an interim order on Tuesday detailing the alleged diversion of funds by Gensol Engineering, saying that the funds were utilised for luxury purchases and prestigious real estate such asa high-end apartment in the Camellias project in Gurugram outside Delhi.
Money was also spent on foreign travel, luxury items like wristwatches, spa payments, credit card payments and transfers to relatives, Sebi said.
Sebi said the mother and the spouse of founder Anmol Singh Jaggi received Rs 62m (£545,000) and Rs 29.8m (£262,000) from the loaned funds respectively.
“...The prime facie findings have shown misutilisation and diversion of funds of the Company 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…,” the interim order by Sebi said.
Sebi has said that according to Gensol’s letters, the loans were sought in order to purchase at least 6,400 electric vehicles for BluSmart.
However, only 4,704 of these vehicles were acquired.
"The promoters were running a listed public company as if it were a proprietary firm," Sebi has said in its order.
"The company's funds were routed to related parties and used for unconnected expenses, as if the company's funds were promoters' piggybank," Sebi said.
The remaining chunk of the funds was funnelled to entities controlled by the Jaggi brothers after being routed through Go-Auto Pvt Ltd, which is Gensol’s EV supplier.
Sebi has now restrained Gensol’s founders from participating in the securities market until further orders and barred them from holding key positions in the company for defaulting on debt repayment.
While Anmol Singh Jaggi serves Gensol as managing director, his brother Puneet serves as the full-time director, with both collectively holding about 39.6 per cent stake in the company in total, according to exchange data.
Gensol confirmed in a statement on Wednesday that it was complying with Sebi’s order. "The company is dedicated to upholding the highest standards of corporate governance and transparency," it said.
The Independent has reached out to Gensol and Anmol Singh Jaggi for comment.
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