A group of investors is considering a $30 million injection into BluSmart, a struggling Indian cab-hailing startup that suspended operations last month. This investment proposal from existing backers is contingent upon co-founder Anmol Singh Jaggi’s resignation. The funding, to be structured as unsecured debt, aims to address BluSmart’s operational liabilities, including outstanding payments and employee wages.
Investors with pro-rata rights, including BP Ventures and Switzerland’s ResponsAbility, began deliberations last week, although both declined to comment on the matter. Although Jaggi has not officially resigned, sources indicate that he has verbally agreed to step down from the board, provided he receives assurances against any future legal repercussions from the startup’s investors.
The suspension of BluSmart’s operations followed an investigation into Gensol Engineering, its main electric vehicle (EV) lessor and co-founded by Jaggi. This situation has left many riders, employees, and the startup’s team—over 600 personnel—impacted, with salaries unpaid since at least March. At present, BluSmart is facing liabilities amounting to approximately 2.5 billion Indian rupees (~$30 million), which includes 500 to 600 million rupees owed to employees.
Moreover, around 8,700 EVs in BluSmart’s fleet have been left idle, threatening the condition of their batteries and components if the service doesn’t resume promptly. The suspension has prompted some drivers to protest in New Delhi, while others may find new opportunities with competitor Evera Cabs, which is absorbing some of BluSmart’s leased vehicles.
Investors are keen to revive BluSmart’s branding to prevent its fleet from being deployed by competitors like Evera and Uber. They aim to get operations back on track within three weeks, but challenges remain, including governance issues linked to Gensol, which have drawn scrutiny from the Indian corporate affairs ministry.
Although Jaggi’s potential resignation seems likely, it is not guaranteed, as the Indian stock exchange regulator has mandated a separate resignation from Gensol. Notably, Eversource Capital expressed an interest in acquiring BluSmart last month, proposing a merger with its B2B fleet operator, Lithium Urban. However, this offer has not been accepted due to a significant devaluation of BluSmart from its prior $300 million worth.
Lithium Urban itself is experiencing challenges, with most of its fleet nearing the end of its lifecycle. There have also been talks of a possible acquisition by the Adani Group, which expressed interest in utilising BluSmart’s fleet at its airport operations.
Despite the difficulties, investors remain hopeful that with a successful relaunch, BluSmart could attract further investments from strategic partners, potentially improving its standing in the marketplace.
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