BluSmart to reroute to Uber as fleet partner amid Gensol-led cash crisis: Report

In a significant move, electric ride-hailing startup BluSmart is set to exit its core business, with plans to become a fleet partner for Uber, The Economic Times reported. BluSmart’s shareholders have approved a plan to transition its fleet from its platform to Uber, the report cited sources as saying. The transition will occur in phases, starting with 700-800 cars, and once complete, BluSmart will wind up its ride-hailing operations.

The move comes amid the financial turmoil faced by renewable energy and EV company Gensol Engineering and its promoters. Gensol Engineering and BluSmart were both founded by  Anmol Singh Jaggi and Puneet Singh Jaggi.

The decision comes as BluSmart faces severe financial difficulties, with a cash burn exceeding Rs 20 crore monthly. Efforts to raise $50 million earlier this year were unsuccessful, the report said.

The company's woes mounted even further after liquidity issues at its key partner Gensol Engineering.

BluSmart's founders, Anmol Singh Jaggi and Puneet Singh Jaggi, have been injecting personal capital into the company alongside external funding.

On Tuesday, the Securities and Exchange Board of India (SEBI) issued an interim order barring the Jaggis from holding key positions at Gensol or participating in the securities market owing to alleged defaults on loans totaling approximately ₹9.78 billion (about $114 million) borrowed from the Indian Renewable Energy Development Agency (IREDA) and Power Finance Corporation (PFC). The funds were primarily used to purchase electric vehicles for BluSmart, it has been alleged.

SEBI's investigation revealed that the promoters diverted company funds for personal and unrelated expenses.

BluSmart is seeking a $15-20 million investment from Uber, contingent upon the successful transition of its fleet and meeting certain performance criteria. Uber has been in early discussions regarding a potential acquisition. However, the report quoted an Uber spokesperson: “Uber works with a range of fleet operators and routinely engages with third parties to enhance mobility access for riders and earning opportunities for drivers. We have no updates to share at this time.”

The transition is not only driven by financial strain but also by strategic shifts, as BluSmart scales back its international operations, including the closure of its Dubai branch. Gensol Engineering owns more than 5,000 out of BluSmart’s 8,000 vehicles, and a planned sale of 3,000 electric vehicles was recently cancelled, reflecting the company's operational challenges.

The ride-hailing industry in India is experiencing significant changes, with companies like Rapido increasing market share at the expense of others. BluSmart, having raised over $150 million in funding since its inception in 2019, now faces dwindling daily rides, dropping to less than half of last year’s peak numbers.

Key executives have departed amid the turmoil, including Anirudh Arun, CEO of BluSmart Fleet, and Rishabh Sood, Chief Technology Officer. Tushar Garg, formerly of Uber India, also resigned from his role as Chief Business Officer. This exodus of leadership raises questions about the company’s future stability and strategic direction.