Kewal Ahuja - director of SGF food brand allegedly involved in siphoning of funds

Franchising in India has witnessed a four-fold growth since 2013. India has always remained as an emerging marketplace for franchise business. Nowadays, more and more are starting to trust the ownership of Franchise and investing their hard-earned money in franchising. SGF (Spice, Grill and Flame) is one among those franchisees, incorporated in 2019. Kewal Ahuja has presented his business to people as a tempting & lucrative business. But Kewal Ahuja has allegedly misrepresented his business and has apparently conducted a potential financial fraud.

India has always remained as an emerging marketplace for franchise business. Nowadays, more and more are starting to trust the ownership of Franchise and investing their hard-earned money with an expectation of getting a sustainable income for the months during the year. Covid has added fuel to this thought, because franchise ownership is an easy way to make money during these times.

Franchising in India has witnessed a four-fold growth since 2013 and is estimated at USD 50.4 billion currently. Delhi NCR’s bustling markets greets you with the choicest of top brands. People including corporate professionals as well as an innocent salaried middle-class youth have started to show more and more interest investing in the franchise business.

SGF (Spice, Grill and Flame) is one among those franchisees, incorporated dated January 29th, 2019, with the main objective of providing food services and ancillary objective included the business activities related to this industry and having Liaison offices and services rendering. SGF’s Kewal Ahuja is one among those franchisee owners who has grown up well in this segment of business. He became the owner of many franchisees starting from few to many through his paid PR and advertisement. This cleans his image on media and social media.

Kewal Ahuja has presented his business to people in such a way that it had looked so tempting & lucrative business with high return value in minimum frame of time. The people who were being told to leave their job or lost their jobs during this pandemic, were in need of finding an option to get their livelihood generated by some or the other means of business. High returns & more than a sustainable revenue generation were offered by Kewal Ahuja SGF fraud in his 2 modules of business FOFO & FOCO.

Large sum was collected as franchise fee by SGF and this amount was not reported to regulators such as Income Tax Department and GST Council under regulatory filings. SGF is non-compliant in MCA filings as well. This report highlights the compliance irregularities and potential financial fraud. The facts discovered after a deep analysis of SGF and its sister concern company highlights that:

· Both SGF and spice are registered at same address.

· Kewal Ahuja remains as key management in both the company. Both are related parties and spice is a sister concern of SGF.

· The sister concern-spice’s reported turnover for last 3 years is as follows.

Year & Y (INR)

• · 2017–18 - 1.26 crore
• · 2018–19 - 2.54 crore
• · 2019–20 - 2.70 crore

SGF in all these 3 years have reported NIL returns in GST and Income tax. However, the sister concern’s reported top line is mentioned above. This is a potential angle of fund misappropriation. SGF also has a track record of statutory non-compliance. The details are as follows:

· SGF was formed in year 2019 and first auditor was appointed on February 25th, 2019, however till march 2019, there was no available record with MCA for financial and annual filing.

· Second auditor was appointed in SGF on 31/12/2020 for the period from 1st April: 2019 till march 31st 2024, there is again no available record with MCA for financial and annual filing. The first auditor resigned in just few months and second auditor was appointed in extra ordinary general meeting, which raise an alarm.

· SGF has not filed annual returns and financial statements with MCA for last 2 years which is a mandator exercise for every PVT. Ltd company in India. If there is a further non-compliance for third year, MCA may start the process of striking off suo moto. SGF has not initiated any e forms to correct the non-compliance which highlights the intent to no follow the going concern.

· SGF has filed no returns the income tax returns for the last three years. If the company is collecting franchise fee, the company should be filing the profit and loss account with the income tax department even if the net profit is NIL. This may highlight malicious intent.

· SGF has applied for 3 GST numbers. Out of these 3 GST numbers’ 2 are registered in Delhi and Haryana state and the status is INACTIVE. These GST numbers are cancelled by GST council suo moto. GST number of Mumbai is active however, there is no return filed by company since September 2021. The malicious intent of SGF is evident because with an inactive GST registration, SGF collected GST from franchisee.

Further, Kewal Ahuja SGF is also the Treasurer of BJYM Delhi Pradesh and is focused on becoming a leading politician. Therefor he also has his political influence to his advantage in cheating people or allegedly conducting fraud. All the people concerned and intending to invest in SGF should be cautious of this fraud, the better being refrained from investing in SGF owned by Kewal Ahuja, where cheating and doing fraud has been kept as a main criterion of the business.