Indias market regulator released a probe Tuesday into Gensol Engineering after finding supposed misuse of electric car loans.
BluSmart, a ride-hailing startup connected to Gensol that was when seen as an emerging Uber rival in the South Asian market, has actually likewise been swept up into the examination.
The Securities and Exchange Board of India (SEBI) disallowed Gensol Engineerings creators, Anmol Singh Jaggi and Puneet Singh Jaggi, from holding crucial positions in the public-listed business and taking part in the securities market while the firm examines.
The Jaggi bros likewise co-founded BluSmart Mobility.
Anmol Singh Jaggi informed A Technology NewsRoom the business was fully complying with the Indian regulator and is assembling all the essential documents and facts to clarify.This is simply an interim step, not a decision, and Im positive that when everythings reviewed effectively, our position will be clear.
Weve always thought in doing things properly, and that wont change, Jaggi said.In its interim order, the regulator accused the Jaggi brothers of rerouting substantial loan amounts for personal use, including buying luxury real estate on the borders of Indias capital.The regulator stated Gensol Engineering availed term loans of 9.78 billion Indian rupees (around $114 million) from the state-owned Indian Renewable Energy Development Agency and Power Finance Corporation.
Of that, 6.63 billion rupees were set for purchasing 6,400 EVs to rent to BluSmart.
Nevertheless, the business obtained just 4,704 EVs for 5.68 billion rupees, the regulator noted in its order (PDF).
Some of these funds were then used for purposes unrelated to the purpose/objective of the approved term loans, which included (i) individual expenses of the promoter, consisting of purchase of high-end realty; (ii) advantage to the personal promoter entities/transfer of funds to promoters close family members; and so on, the regulator said.Gensol previously rejected the supposed defaulting on debt payments.
However, the regulator has actually mentioned info from the loan providers and said there were numerous circumstances of default by the Gujarat-headquartered company.The promoters were running a noted public business as if it were an exclusive company, the regulator alleged in the order.The order comes over a month after credit-rating agencies downgraded Gensol, raising issues over the hold-ups in the companys financial obligation servicing and corporate governance practices.Meanwhile, BluSmart, a Gensol customer and the entity sharing its co-founders, is having a hard time due to mounting cash burns and an absence of external capital.
The start-up shut down its service in Dubai, which was released in 2015, and is presently exploring ways to sustain its business in India, which covers Delhi-NCR, Bengaluru, and Mumbai.The ride-hailing startup planned to pivot into a fleet partner for its arch-rival Uber, the Indian paper Economic Times reported earlier this week, pointing out people familiar with the developments.Founded in late 2018 as Gensol Mobility, BluSmart started as an Uber fleet operator.
However, the start-up became an all-EV rival to Uber after starting its standalone operations before the COVID-19 pandemic.BluSmart raised $25 million in January 2024 to increase its EV charging stations from Switzerland-based impact fund ResponsAbility.
Later on that year, the company was reportedly in speak with raise as much as $100 million, but that funding never materialized.The Gurugram-based startup has actually raised more than $486 million in total financing, per Crunchbase.
It counts BP Ventures and Mayfield India Fund amongst its early investors.Last year, BluSmart had a fleet of 6,000 EVs, including around 180 ZS SUVs from MG Motor and the staying batch comprised of Tata Tigor sedans.
The startup planned to increase its fleet size to 10,000 EVs by year-end, however it did not reach the target.Jaggi did not address what procedures they are taking particularly for BluSmart.Gensol Engineerings stock toppled more than 83% this year, last trading at 129 rupees soon before the market closed on Tuesday.