How BluSmart's bright future turned grim amid co-founder's dark secrets

BluSmart users woke to a difficult day on April 16 as India’s first ride hailing cab company with an all-electric fleet suddenly pulled the plug on its services, leaving its riders in Delhi-NCR, Bengaluru and Mumbai scrambling for alternatives and its drivers — many of whom had no idea they had reached a dead end — in the lurch.The Gurugram-headquartered company abruptly suspended services a day after market watchdog Securities and Exchange Board of India (Sebi) banned brothers Anmol Singh Jaggi and Puneet Singh Jaggi from the securities market for alleged misappropriation of funds in Gensol Engineering, the company they co-founded. Both the promoters have also been barred from serving as directors or in any key managerial position at the Ahmedabad-based Gensol Engineering, which is a publicly-listed mid-tier turnkey solar engineering, procurement and construction company.Anmol is also co-founder of BluSmart Mobility, which is the sister concern of Gensol. medium nocaption120383689The 29-page report by Ashwani Bhatia, whole time member of Sebi, detailed how company funds were diverted to jack up share prices of Gensol – a company named Wellray, an arm of Gensol, was used to trade in the shares of the company and create an artificial market to inflate the stock price. For more than two-and-a-half years till December 2024, about 99% of the stock’s volume was created using funds from Wellray. “What we are witnessing is not just financial mismanagement — it’s a full-scale betrayal of public trust,” Sebi in its order noted. “Promoters were running the company like a personal piggy bank.”The report said that the funds diverted by the two brothers may require write-offs from Gensol’s accounts, leading to investor losses. medium nocaption120383737Where did EV funds go? ₹43cr flat, ₹26L golf sets...The two promoters of the once high-flying Gensol Engineering showed a complete disregard for laid down corporate governance norms. Their deeds included illegal fund diversion for personal enrichment, stock price manipulation, forgery of ‘no default’ letters from lenders like the Indian Renewable Energy Development Agency (IREDA) and Power Finance Corp (PFC) to falsely project there was no default by the company, and misleading Sebi.Sebi's probe showed that Anmol and Puneet used hundreds of crores of rupees of the entity as they wished. The interim investigation revealed that the two had systematically used loans from several creditors, taken in the name of Gensol, to buy a luxury flat in The Camellias in Gurugram and to jack up Gensol’s stock price. Not only this, the loans were used for personal benefit through their private ventures and for purposes other than for which they were taken.The investigation revealed that the two brothers, among other expenses for personal use from diverted funds, spent Rs 26 lakh to buy golf sets, nearly Rs 23 lakh to pay credit card dues, and around Rs 8 lakh for interior decoration.In one of the several instances of fund diversions, Gensol transferred Rs 775 crore to Go-Auto, an auto dealership through which it bought EVs for BluSmart. Of this, about Rs 570 crore was used to buy EVs for BluSmart. Of the balance Rs 205 crore, Rs 43 crore was diverted to buy the luxury flat in Gurugram, developed by real estate major DLF. Initially booked in the name of the mother of the two promoters, the transaction was later reversed in the name of Capbridge Ventures, a partnership of the two Jaggi brothers.Commuters get the bluesBluSmart began operations in 2019 as an early bird with the EV industry still nascent and the pandemic yet to come, to capitalise on the potential for an energy transition in public transport. It doesn't own any vehicles, instead it leases its cars, primarily from Gensol.medium nocaption120399583It established itself as a differentiated service, its USP not just a noiseless electric fleet, but clean cars and a punctual service. In a highly competitive market dominated by Uber and Ola, it carved its own niche and a loyal user base.The abrupt suspension of its service following Sebi’s order caused a commuting crisis for many. Jagriti Kumar, a Gurugram-based IT professional, said “Where I live, near Dwarka Expressway, cabs are the only viable public transport. BluSmart was the only one I could rely on to get to my office in Udyog Vihar. Cancellations were rare, and the fare consistent at Rs 400-450. I will now be at the mercy of unpredictable surge pricing and drivers of other services who often cancel,” she said.Priyanshi Saha, who works in Gurugram’s Cyber Hub said she preferred BluSMart for its standard fares and non-polluting EV. “I tried to book and could not as the date and time slots would not show up. I called my friends who also had the same experience,” said Saha.Abhijeet Ghosh, who works in central Delhi, said he discovered BluSmart after the pandemic when he returned to work and found it to be a “fabulous experience, barring the rare occasion”. “I was a regular user for two years. The drivers came before time, were polite, the A/C functioned, and the car made no noise. It was far superior to other cab aggregator services in Delhi. I would often converse with drivers and a majority seemed to be reasonably happy with the employer,” said Abhijeet.“For me, BluSmart stood for its reliability,” said Ashish Malik, a Ghaziabad resident. “My airport travel is at odd hours and I could always count on them. There were hardly any last-minute cancellations, unlike other apps,” he said.BluSmart regulars were also worried about funds in their wallets on the app. Aditya Parolia, a Supreme Court lawyer who has fought numerous consumer cases, said all customers should immediately email the company with screenshots for a refund (More on how you can claim a refund here). medium nocaption120383760Trouble for driversThe blow was a lot harder for BluSmart drivers, many of whom had no clue when they started their workday that it could be their last. Some were under the impression that the app was glitching. Others said they had only picked up pre-booked passengers on Wednesday.One of the drivers present at T3 in Delhi’s Indira Gandhi Airport, Dileep, said he received a message from the company asking him not to report on Thursday (April 17). “We were told a vendor would be checking the cabs, so we’re not supposed to take them out on Thursday.” In BluSmart’s case, the company leases the cars and drivers collect wages. “If the company shuts down, many of us will be in trouble. We don’t own the cars and can’t just shift to other platforms,” Dileep said.Arun, a driver from Faridabad, said, “We were paid Rs 3,200 for a 10-hour shift and Rs 4,300 for a 12-hour one. There were also daily bonuses for meeting targets. It was a good system. I’m not sure what’s happening now as I didn’t get any rides on Wednesday.”End game for BluSmart?Even prior to developments over the last few days, BluSmart’s operations had become truncated in the backdrop of the crisis surrounding Gensol. As of early this month, the company was operating only about half of the 25,000-30,000 daily rides it was doing at its peak last year.The platform has been burning through over ₹20 crore every month, and was winding down operations following its failed attempt to raise fresh funds amounting to some $50mn, or over ₹400 crore.At least three key executives quit recently — Anirudh Arun, CEO of BluSmart Fleet; Rishabh Sood, chief technology officer; and former Uber India executive Tushar Garg, who was the chief business officer at BluSmart. BluSmart also scaled down its international ambitions, closing operations in Dubai. Since being founded in 2019, the BP Ventures-backed startup has raised over $150 million in equity and debt funding, according to Tracxn.The latest turn of events at Gensol has raised concerns over the viability of BluSmart. The cash-strapped firm, which was understood to be considering becoming a fleet partner of rival Uber, may now find it difficult to reach such an arrangement after the Sebi crackdown on Gensol, analysts said.Its possible collapse will be a significant setback to the country’s transition to sustainable mobility.Inputs: Ashni Dhaor, Anjali Singh & Ishita Jairath, Pranav Mukul