Gensol crisis may dent India's image temporarily

THE ongoing crisis at Gensol Engineering (GEL) and BluSmart could temporarily hurt India's appeal among investors.

- UMA KANNAN & ARSHAD KHAN @Bengaluru/New Delhi

THE ongoing crisis at Gensol Engineering (GEL) and BluSmart could temporarily hurt India's appeal among investors. However, venture capitalists (VCs) and industry insiders TNIE spoke to said the episode serves as a lesson for start-ups to strengthen corporate governance and audit mechanisms.

"Gensol is a listed company, governed by a board and comes under listing guidelines. However, there has been a miss on early signals which the board or the CFO should have highlighted," said Anil Joshi, managing partner, Unicorn India Ventures. He said there is a need for strong internal audit mechanisms and an overlooking panel which can question such transactions. "From Blusmart's perspective, dependence on a single vendor and a related party was a big issue and perhaps VC/investor missed correcting it due to growth perspective," he added.