India’s BluSmart Under Scrutiny: Gensol Investigation Uncovers Alleged Misuse of EV Loan Funds
India’s Securities and Exchange Board (SEBI) has initiated a significant investigation into Gensol Engineering, a company embroiled in allegations of misusing electric vehicle (EV) loans. This inquiry also involves BluSmart, a ride-hailing startup previously viewed as a competitive alternative to Uber in the South Asian region.
Regulatory Actions Against Gensol Engineering
As part of the ongoing investigation, SEBI has imposed restrictions on Gensol Engineering’s founders, Anmol Singh Jaggi and Puneet Singh Jaggi. They are currently barred from holding key positions within the publicly-listed company or participating in the securities market. This action is a response to allegations that they misappropriated substantial loan amounts for personal gains.
Allegations of Misuse of Funds
The regulator’s interim order claims that the Jaggi brothers redirected funds intended for electric vehicle purchases towards personal expenses, including:
- Acquisition of luxury real estate near India’s capital.
- Financial benefits to private promoter entities and close relatives.
Gensol Engineering had secured term loans amounting to 9.78 billion Indian rupees (approximately $114 million) from the Indian Renewable Energy Development Agency and Power Finance Corporation. Of this amount, 6.63 billion rupees were earmarked for acquiring 6,400 EVs for leasing to BluSmart. However, Gensol only purchased 4,704 EVs for 5.68 billion rupees, raising red flags for the regulator.
Company’s Response to Allegations
In a statement to TechCrunch, Anmol Singh Jaggi asserted that Gensol Engineering is “fully cooperating” with SEBI, emphasizing the company’s commitment to transparency. He stated, “This is just an interim step, not a final decision, and I’m confident that once everything’s reviewed properly, our position will be clear.”
Impact on BluSmart Mobility
BluSmart, co-founded by the Jaggi brothers, has also been significantly affected by the ongoing scrutiny. The startup is facing challenges due to:
- High cash burn rates.
- Lack of external funding.
- Closure of operations in Dubai.
Despite these hurdles, BluSmart is exploring options to sustain its operations across major Indian cities like Delhi-NCR, Bengaluru, and Mumbai.
Future Plans and Funding Challenges
Initially established as Gensol Mobility in late 2018, BluSmart transitioned to a fully electric vehicle operator, positioning itself as a direct competitor to Uber. The startup raised $25 million in January 2024 to expand its EV charging infrastructure, but subsequent plans to secure up to $100 million in funding did not materialize.
As of last year, BluSmart operated a fleet of 6,000 EVs, including models from MG Motor and Tata. The startup aimed to increase its fleet size to 10,000 EVs by year-end but fell short of this target.
Stock Market Reactions
In light of the investigation, Gensol Engineering’s stock has plummeted over 83% this year, closing at 129 rupees shortly before market close on Tuesday. This decline reflects growing investor concerns regarding the company’s governance and financial integrity.
For more details on the electric vehicle industry in India, visit India Today. To learn about the latest trends in corporate governance, check our Corporate Governance page.
