India’s market regulator launched a probe Tuesday into Gensol Engineering after discovering alleged misuse of electrical automobile loans. BluSmart, a ride-hailing startup linked to Gensol that was as soon as seen as an rising Uber rival within the South Asian market, has additionally been swept up into the investigation.
The Securities and Exchange Board of India (SEBI) barred Gensol Engineering’s founders, Anmol Singh Jaggi and Puneet Singh Jaggi, from holding key positions within the public-listed firm and taking part within the securities market whereas the company investigates. The Jaggi brothers additionally co-founded BluSmart Mobility.
Anmol Singh Jaggi advised TechCrunch the corporate was “totally cooperating” with the Indian regulator and is “placing collectively all the mandatory paperwork and info to make clear.”
“This is simply an interim step, not a last choice, and I’m assured that after all the things’s reviewed correctly, our place might be clear. We’ve all the time believed in doing issues responsibly, and that received’t change,” Jaggi mentioned.
In its interim order, the regulator accused the Jaggi brothers of redirecting substantial mortgage quantities for private use, together with shopping for luxurious actual property on the outskirts of India’s capital.
The regulator mentioned Gensol Engineering availed time period loans of 9.78 billion Indian rupees (round $114 million) from the state-owned Indian Renewable Energy Development Agency and Power Finance Corporation. Of that, 6.63 billion rupees have been set for buying 6,400 EVs to lease to BluSmart. However, the corporate acquired solely 4,704 EVs for five.68 billion rupees, the regulator famous in its order (PDF).
“Some of those funds have been then used for functions unrelated to the aim/goal of the sanctioned time period loans, which included (i) private bills of the promoter, together with buy of high-end actual property; (ii) profit to the personal promoter entities/switch of funds to promoters’ shut kinfolk; and many others.,” the regulator mentioned.
Gensol beforehand denied the alleged defaulting on debt funds. However, the regulator has cited info from the lenders and mentioned there have been “a number of situations of default” by the Gujarat-headquartered firm.
“The promoters have been working a listed public firm as if it have been a proprietary agency,” the regulator alleged within the order.
The order comes over a month after credit-rating businesses downgraded Gensol, elevating issues over the delays within the firm’s debt servicing and company governance practices.
Meanwhile, BluSmart, a Gensol buyer and the entity sharing its co-founders, is struggling because of mounting money burns and an absence of exterior capital. The startup shut down its service in Dubai, which was launched final yr, and is presently exploring methods to maintain its enterprise in India, which spans Delhi-NCR, Bengaluru, and Mumbai.
The ride-hailing startup deliberate to pivot right into a fleet companion for its arch-rival Uber, the Indian newspaper Economic Times reported earlier this week, citing folks acquainted with the developments.
Founded in late 2018 as Gensol Mobility, BluSmart began as an Uber fleet operator. However, the startup emerged as an all-EV rival to Uber after beginning its standalone operations earlier than the COVID-19 pandemic.
BluSmart raised $25 million in January 2024 to spice up its EV charging stations from Switzerland-based impression fund ResponsAbility. Later that yr, the corporate was reportedly in talks to lift as much as $100 million, however that funding by no means materialized.
The Gurugram-based startup has raised greater than $486 million in whole funding, per Crunchbase. It counts BP Ventures and Mayfield India Fund amongst its early traders.
Last yr, BluSmart had a fleet of 6,000 EVs, together with round 180 ZS SUVs from MG Motor and the remaining batch made up of Tata Tigor sedans. The startup deliberate to extend its fleet dimension to 10,000 EVs by year-end, however it didn’t attain the goal.
Jaggi didn’t reply what measures they’re taking particularly for BluSmart.
Gensol Engineering’s inventory tumbled greater than 83% this yr, final buying and selling at 129 rupees shortly earlier than the market closed on Tuesday.
