BluSmart Suspends Service in India Amid EV Loan Investigation

BluSmart Service Suspension and Regulatory Investigation

BluSmart, an all-electric cab service in India previously considered a competitor to Uber, has reportedly ceased operations in several cities. This development coincides with an investigation initiated by India’s market regulator concerning Gensol Engineering, a publicly traded company with shared co-founders.

Service Disruptions and Customer Concerns

Currently, the BluSmart service, which previously operated in Delhi-NCR, Bengaluru, and Mumbai, is showing limited or no availability for many users. An advisory was issued by Delhi Airport confirming a temporary suspension of BluSmart’s services. Customers affected by this disruption have expressed worries regarding access to funds held within their BluSmart wallets.

SEBI Investigation into Gensol Engineering

The service interruptions occurred shortly after the Securities and Exchange Board of India (SEBI) began investigating Gensol Engineering. The investigation focuses on BluSmart’s co-founders, Anmol Singh Jaggi and Puneet Singh Jaggi, with accusations of diverting significant loan funds for personal expenditures, specifically the purchase of luxury properties near India’s capital city.

Leadership Changes at Gensol

In response to SEBI’s directives, the Jaggi brothers relinquished their managerial roles on Wednesday. Gensol communicated in a filing to Indian stock exchanges that the brothers are no longer involved in the company’s management, effective immediately.

Delayed Communication with Investors

Despite the service becoming unavailable, the BluSmart board reportedly did not provide updates to its investors until Wednesday, according to sources. This lack of timely communication has raised concerns among stakeholders.

Recent Financial Performance

A BluSmart investor revealed that the company reported an annual recurring revenue (ARR) of 8.4 billion Indian rupees ($98 million) for 2024. This translates to a monthly revenue of 700 million Indian rupees. The startup also indicated an expansion of its electric vehicle (EV) fleet to approximately 8,700 units, an increase from 6,000 EVs earlier in the year.

Investor Base and Funding

BluSmart has attracted investment from prominent global firms, including BP Ventures and Mayfield India Fund. The Gurugram-based company secured $25 million in its latest funding round from ResponsAbility, a Switzerland-based impact fund, with the intention of bolstering its EV charging infrastructure. The company was valued at $250 million at the time of this funding.

Rumors of Partnership with Uber

Recent media reports suggested BluSmart was exploring a transition to becoming a fleet partner for Uber. BluSmart’s EV fleet was leased from Gensol. However, Gensol refuted these claims in a recent filing, stating that it has not entered into any agreements or discussions regarding mergers, acquisitions, or significant transactions that haven’t been publicly disclosed.

Lack of Response from Co-founder

BluSmart co-founder Jaggi did not respond to requests for comment regarding the situation. Co-founder Punit K. Goyal shared screenshots of LinkedIn posts indicating he was facing repercussions due to the alleged corporate governance issues at Gensol.

Key Takeaways

• BluSmart has suspended services in major Indian cities.
• The suspension follows a SEBI investigation into Gensol Engineering and its co-founders.
• Allegations include misuse of loan funds for personal expenses.
• The Jaggi brothers have stepped down from their managerial positions at Gensol.
• BluSmart reported strong financial performance prior to the disruption.