“They stopped listening”. As social media and conversions in the startup universe continue an unending discussion about the unfolding debacle of the ventures promoted by the Jaggi brothers – Gensol Engineering, BluSmart and Gensol Vehicles – the common refrain is that the brothers did not heed advice of multiple stakeholders as their ventures grew in size and securing funds became relatively easier.Since last week, there has been incessant chatter on various social media pages about what went wrong at Gensol Engineering and consequent shutdown of the electric ride hailing service BluSmart, with many early investors in the latter venture expressing disappointment at the abrupt halt to cab services. Anmol Singh Jaggi and Puneet Singh Jaggi are among the promoters of Gensol Engineering who have been barred by market regulator Sebi from holding any managerial positions in the listed solar EPC firm, after it found alleged irregularities including falsification of loan documents and diversion of funds for personal use by the Jaggi brothers.
“They stopped listening” – A common criticism
- Multiple stakeholders, including independent directors, advisors, and investors, have said that the Jaggi brothers, gradually stopped engaging with them as the companies grew and funding became easier.
- This lack of accountability is seen as a major contributor to the current crisis.
While the goings on at Gensol have been a cause for concern, the sudden shutdown of consumer facing BluSmart has impacted customers more and it is BluSmart’s future which is primarily the focus of discussions. The bit about Jaggis not listening to stakeholders first came to light when one of the independent directors on the board of Gensol, Arun Menon, spoke about being stonewalled for months when he sought a meeting with Jaggis for discussion restructuring of the loans taken by Gensol, which ultimately led to its downfall. Menon said in his resignation letter that he had been trying to speak to Anmol Singh Jaggi in July/August last year to seek clarity on the company’s debt and suggest ways to reduce the interest cost through debt restructuring. “While you had messaged me you will call back, it never progressed. I had also spoken to Parmar on 2-3 occasions and asked him for a meeting with the CFO, which never seemed to materialise,” Menon said. In other words, the promoters have stopped listening to even this independent director.
Blusmart Shutdown Fallout
- The sudden halt in Blusmart’s electric cab services has triggered public outcry, with over 15,000 drivers affected and users left with unusable wallet balances.
- Despite the controversy, many consumers still support the service and want it revived.
Now, in a long LinkedIn post, Joshi Mandar Shrikant – who describes himself as an angel investor and fund manager – has made a similar observation. He said he was a strategy advisor to BluSmart till 2021 and “thereafter they stopped listening to me”. Shrikant said that he owned M Strategy Global, an advisory firm in Dubai, and provided consultancy to Anmol Singh Jaggi and Punit K Goyal (another co-founder of BluSmart) on strategy, management, investment and finance.
“I could see changes in their attitude, their behaviour as the ecosystem started glorifying them and they became the superstars of EV revolution in India. As I said, they gradually stopped listening to me since the year 2022 and thereafter there has been no professional relationship.”Joshi Mandar Shrikant
While admiring the Jaggi brothers’ knowledge of the electric mobility sector, Shrikant went on to say that “I could see changes in their attitude, their behaviour as the ecosystem started glorifying them and they became the superstars of EV revolution in India. As I said, they gradually stopped listening to me since the year 2022 and thereafter there has been no professional relationship.”
He spoke about having introduced BP Venture to BluSmart. “In 2020, we introduced BP (BP Ventures) with BluSmart and negotiated the private equity investment deal. BP Ventures went on to successfully lead 25 Million USD investment round of Series A of BluSmart. In 2021, we structured their collaboration with the Roads and Transport Authority whereby BluSmart established their operations in Dubai. These operations were shut down recently a few months back,” Shrikant said.
Ahmed L Zubeidi, another startup investor, said BluSmart “always wanted to gulp more than they can chew. They always had a bit of arrogance in them. It’s just that the real animal came out when they started experiencing too much money from investors.” Zubeidi was also involved when BP onboarded BluSmart.
“BluSmart always wanted to gulp more than they can chew. They always had a bit of arrogance in them. It’s just that the real animal came out when they started experiencing too much money from investors.”Ahmed L Zubeidi
In reply to a comment from an EV industry executive, Shrikant said “According to me, the arrogance and overconfidence of the founding team of BluSmart which stopped them from growing. Beyond this, I would not like to mention the details on social media as it involves confidential information.”
Sanjeev Bikhchandani, Founder and Executive VC of InfoEdge and one of the early poster boys of startups, has said that the goings on at Gensol were a setback for the startup ecosystem. In an interaction with agencies, he had said that there were 1.6 lakh registered startups in India and seven-eight lakh of unregistered startups were also taken into account. “There will be some bad actors, but for the most part 95-98 per cent startups are honest”.
Growing clamour for BluSmart return
Even as the alleged fraud and subsequent debacle at Gensol and BluSmart dominate social media interactions, there is a growing clamour for BluSmart’s revival. For one, the withdrawal of services in Delhi NCR and Bengaluru (among other cities) has led to a sudden shortage of ride hailing options, specifically environment friendly cabs. Two, many consumers are worried about unspent amounts in the BluSmart closed wallet with no assurance till now about being reimbursed. Three, an estimated 15000 drivers are at crossroads due to the suddenness of the shutdown of BluSmart. It seems that despite the multiple allegations of fraud and funds diversion in the promoter group Gensol, commuters still swear by the service standards of BluSmart and want it revived.
Investor interest in BluSmart’s revival
- Eversource Capital, a significant player in India’s EV fleet space, holds a 76.93% stake in Lithium Urban Technologies, which focuses on employee transportation and EV-based logistics.
- The fund has reportedly made a non-binding offer to acquire Blusmart, indicating potential plans to revive the shuttered electric ride-hailing service under new management.
Meanwhile, several reports have suggested that Eversource Capital, which describes itself as “an early investor in key platforms to pioneer new industries” has made a non-binding offer to take over BluSmart. A query sent to a senior official of this fund did not elicit a response, with the person redirecting the queries to the communications team which remained unavailable. Eversouce is already an investor in Lithium Urban Technologies, one of India’s largest EV fleet operators focused on four wheeler employee transportation and three wheeler freight segments. Eversource Capital invested in Lithium in March 2022 and owns a 76.93 per cent stake in the company.
Also read: Luxury flat, golf sets, offsetting credit card dues: How Gensol promoters used loans, finds SEBI
