A group of investors are considering a plan to inject another $30 million into BluSmart in a bid to revive the Indian cab-hailing startup that abruptly halted operations last month, Tech Zone Daily has learned. The proposal from these existing investors has a catch: its contingent on BluSmart co-founder Anmol Singh Jaggi agreeing to resign.
The proposed investment will be treated in the form of unsecured debt and will be aimed at fixing the startup’s operational liabilities, including pending dues and employee salaries, two sources told Tech Zone Daily.
BluSmart’s investors with pro-rata rights, including BP Ventures and Switzerland-based ResponsAbility, started discussing the resolution last week. BP Ventures and ResponsAbility declined to comment when reached out on Monday.
While Jaggi has not signed the resignation from BluSmart, sources told Tech Zone Daily he has verbally agreed to resign from its board, subject to assurance he will not face any future legal action from BluSmart’s investors.
Jaggi and BluSmart’s other co-founder, Punit K. Goyal, did not respond to messages sent earlier this week.
BluSmart halted operations last month after a probe was launched into Gensol Engineering, its primary EV lessor and the company that shares Jaggi as its co-founder. The move affected riders looking for EVs, its investors, and its 600 employees, who did not receive their salaries at least until March.
The Gurugram-based startup had around 2.5 billion Indian rupees (~$30 million) in pending dues, which include 500 to 600 million Indian rupees of overdue payments to employees, Tech Zone Daily has learned.
About 8,700 EVs on BluSmart’s fleet have also been abandoned due to the suspension of its service. This could affect the health of batteries and other components on the vehicles if the startup does not restart its service soon.
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The suspension has also impacted BluSmart’s drivers, some of whom have gone on strike in New Delhi to protest the move. Some of those out-of-work drivers may see some relief as Delhi-based EV cab-hailing service Evera Cabs recently announced the addition of 500 cabs leased to it by BluSmart lenders. The startup is also looking to add 1,000 EV cabs currently associated with BluSmart and some of its drivers.
Existing BluSmart investors do not want the startup to lose its branding by letting other cab-hailing companies, including Evera and even Uber, use its fleet on their services.
Sources told Tech Zone Daily the investors are keen to restart the service in the next three weeks. Still, BluSmart’s comeback has some challenges. One of them is the purported corporate governance issues, in addition to those in Gensol impacting the startup indirectly. The Indian corporate affairs ministry recently launched a probe into Gensol and BluSmart for that.
Jaggi’s resignation from BluSmart is also not as certain as it appears. The Indian stock exchange regulator ordered Jaggi and his brother to resign from the publicly-listed Gensol while launching the probe. However, the regulator’s direction does not apply to BluSmart, which is a private entity.
Climate investment fund Eversource Capital, which is backed by Britain’s BP, shared an interest in buying BluSmart in a slump sale last month, as first reported by Indian outlet Inc42. The fund proposed to merge the startup with its B2B fleet operator, Lithium Urban. However, the BluSmart board has not agreed to the offer as it priced the startup at a 60% cut from its earlier $300 million valuation.
Lithium Urban is struggling as a company with mounting losses and most of its vehicles are reaching their end of life, Tech Zone Daily learned last month. Lithium Urban’s original founder Sanjay Krishnan also abandoned the business, a person familiar with the matter said. Eversource Capital and Lithium Urban did not respond to requests for comment at the time.
Indian conglomerate Adani Group also showed interest in buying the EV cab-hailing startup to use its fleet at its airports, Tech Zone Daily learned last month. The company had early talks with the BluSmart board. It already has Uber as a fleet partner.
Adani Group did not respond to a request for comment.
Nevertheless, BluSmart investors hope the startup could be better positioned to attract investments from strategics like Eversource Capital, Uber, or Adani after restarting its operations.
