Indian market regulators have launched an investigation into Gensol Engineering on Tuesday after alleged misuse of electric vehicle loans. Blusmart, a riding startup connected to Gensol, once considered an emerging Uber rival in the South Asian market, was also swept over the investigation.
The Securities and Exchange Commission of India (SEBI) has held key positions of Gensol Engineering’s founders Anmol Singh Jaggi and Puneet Singh Jaggi, and have joined the securities market during the investigation by agents. The Jagi brothers also co-founded Blusmart Mobility.
Anmol Singh Jaggi told TechCrunch that the company is “completely working” with Indian regulators and “consolidates all the documents and facts needed to make it clear.”
“This is just a temporary step, not a final decision. I’m sure that once everything is reviewed properly, our position will become clear. We believe in always doing things responsibly and that remains the same,” Jagi said.
In the interim order, regulators accused the Jagi brothers of redirecting substantial loan amounts for personal use, including purchasing luxury properties in the outskirts of India’s capital.
Regulators said Gensol Engineering has available term loans of 9.788 billion Indian rupee (approximately $114 million) from the state-owned Indian renewable energy development agency and Power Finance Corporation. Of that, Rs 6.63 billion was set to buy 6,400 EVs to lease to Blusmart. However, the company has only acquired 4,704 EVs against Rs 5,688 crore, regulators point out in that order (PDF).
“Some of these funds were used for purposes independent of the purpose/purpose of the approved term loan, including (i) the personal costs of the promoter, including the purchase of high-end real estate.
Gensol previously rejected suspicion of defaulting debt payments. However, regulators cited information from lenders, saying its Gujarat headquarters has “multiple default instances.”
“The promoters operated publicly listed companies as if it were their own company,” the regulator claimed in the order.
The order comes a month after the credit rating agency downgraded Gensol and raised concerns over delays in the company’s debt services and corporate governance practices.
Meanwhile, Blusmart, a Gensol customer and an entity that shares co-founders, is struggling due to cash burns and a lack of external capital. The startup shut down its service in Dubai, which was launched last year, and is currently looking for ways to maintain its operations in India, spanning Delhi NCR, Bengaluru and Mumbai.
The Ridehailing startup had planned to pivot to a fleet partner for its arch rival Uber. The Indian newspaper Economic Times reported earlier this week, citing people familiar with development.
Founded as Gensol Mobility in the second half of 2018, Blusmart started as an Uber Fleet Operator. However, the startup has emerged as Uber’s all-EV rival after launching standalone operations prior to the Covid-19 pandemic.
Blusmart raised $25 million in January 2024, boosting EV charging stations due to the response rate of the Swiss-based impact fund. Later that year, the company reportedly was in discussions to raise up to $100 million, but the funds never came to fruition.
The Gurugram-based startup has raised more than $486 million in total funding, according to Crunchbase. BP Ventures and Mayfield India Fund are counting among the early investors.
Last year, Blusmart had a fleet of 6,000 EVs, including the remaining batch consisting of about 180 ZS SUVs from MG motors and Tata Tigor Sedans. The startup had planned to increase the fleet’s size to 10,000 EV by the end of the year, but it failed to reach its target.
Jaggi did not answer what measures he is taking exclusively for Blusmart.
Gensol Engineering shares fell more than 83% this year, trading at Rs 129 just before the market closed on Tuesday.