BluSmart cab services stay suspended in Delhi-NCR, Bengaluru, Mumbai as co-founder under Sebi lens

Amid concerns expressed on social media about customer funds blocked in BluSmart wallets, the email said the company will only 'initiate a refund within the next 90 days if services do not resume before then.'

Bengaluru: All-electric cab service BluSmart suspended its services on Thursday, a person in the know told DH. This comes two days after a Securities and Exchange Board of India (Sebi) order which found severe financial misuse of funds meant for purchase EVs and subsequent default on loans procured, by BluSmart founders Anmol Singh Jaggi and Puneet Singh Jaggi.

The company closed cab bookings across the cities it operates in: Delhi-NCR, Bengaluru, and Mumbai.

Out of a total of over 8,500 cabs, Bengaluru has the second largest fleet size after NCR. These were the numbers as of March, though they had been increasing before the closure, the person told DH. The company also operates a large number of charging stations.

The company is still figuring out their future plan of action, the person added.

BluSmart sent an email to customers on Thursday, with the clarification, “We’ve decided to temporarily close bookings on the BluSmart app.” It added that BluSmart will initiate a refund within the next 90 days if services do not resume before then, speaking of customers’ money in the app’s wallet.

Multiple instances of default by Gensol Engineering Limited in servicing their loans were observed, as per the Sebi order. Anmol and Puneet are promoters and directors of Gensol.

“It was noted that out of Rs 977.75 crore availed by the company from IREDA (Indian Renewable Energy Development Agency Ltd) and PFC (Power Finance Corporation) as term loans, Rs. 663.89 crore was for purchasing 6,400 electric vehicles,” stated the order.

Gensol procured EVs and subsequently leased them to BluSmart, said the order as per Gensol submissions. According to Sebi’s order, fund diversion primarily occurred in the context of EV purchases, including a payment for a golf set worth Rs 26 lakh by Anmol.

“It can be noted from the above that funds availed by Gensol as loans for procuring EVs were, through layered transactions, partly utilised for buying a high-end apartment in The Camellias, DLF Gurgaon, in the name of a firm where the MD of Gensol and his brother are designated partners,” stated the order by Sebi.

“The company’s funds were routed to related parties and used for unconnected expenses, as if the company’s funds were promoters’ piggybank,” the order added.

Both Anmol and Puneet have been barred from the securities market, as per the interim order by Sebi until further orders. They also resigned following the order which restrained them from holding the position of a director or key managerial personnel in Gensol. Gensol is also directed to put on hold the stock split announced by it.

Gensol’s Independent Director Arun Menon also resigned, as per a regulatory filing on Wednesday. “There was growing concern on the leveraging of GEL balance sheet to fund the capex of other businesses ; and the sustainability of servicing such high debt costs by GEL,” he said in his letter to Anmol.

Gensol's shares fell 5% on Thursday, hitting its lower circuit and record low, reaching Rs 116.54 on the NSE. With this, the company's shares have been falling for seven straight sessions.