In today’s Finshots, we break down what’s ailing BluSmart.

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The Story 

BluSmart, once the blue-eyed child of the cab ride-hailing world, is now facing its toughest challenge since its inception in 2019.

Last week, its top brass, the CEO, CBO, CTO and VP (Chief Executive Officer, Chief Business Officer, Chief Technology Officer and Vice President) put down their papers and moved through the exit doors. While the company threw speculation about Uber acquiring it straight out the window, one thing is clear: clouds of troubles are looming. 

And to think, not too long ago, people were celebrating BluSmart, sharing words of appreciation in LinkedIn posts for the quality of service it offered. Investors like BP Ventures and Mayfield India Fund were all in, too. A Zurich-based climate finance firm even poured $24 million into the company about a year ago. So, yeah, it wouldn’t be wrong to say that things were going off without a hitch for BluSmart. 

So then what went wrong, you ask?

Well, let’s take it from the top.

See, BluSmart set itself apart by going all-in on electric vehicles (EVs) and positioning itself as the sustainable alternative to Ola and Uber. But there was one key difference in their business models. Ola and Uber relied on drivers who owned or financed their own cars, keeping the financial burden off their balance sheets. BluSmart, on the other hand, had to lease EVs from leasing companies or third-party financiers, exposing it to significant financial risk. Think about it. If leasing costs went up or its leasing partners pulled back, its entire fleet and business model could be at risk.

And that is exactly what happened.

At the centre of the storm is Anmol Singh Jaggi, who founded both Gensol Engineering, a public company focused on solar energy and EV leasing and BluSmart, a privately owned EV cab service. But here’s where things get tricky. Gensol wasn’t just any EV leasing company. It secured government-backed loans from the Indian Renewable Energy Development Agency (IREDA) to purchase thousands of EVs, most of which ended up in BluSmart’s fleet. Essentially, government-backed money meant for Gensol indirectly fuelled BluSmart’s expansion, with IREDA’s knowledge, of course.

But there was another layer to this relationship. Gensol’s FY24 annual report disclosed contracts worth over ₹148 crores with BluSmart’s subsidiaries, raising questions about just how intertwined the two companies really were.

The problem? While BluSmart thrived, Gensol’s public investors weren’t directly benefitting because BluSmart wasn’t a Gensol subsidiary. It remained a separate private entity. Plus, Gensol wasn’t exactly transparent about how much money was flowing into BluSmart.

BluSmart argued that all these deals were fair and independent, conducted at arm’s length and approved by the board. But with the companies closely tied, questions about corporate governance started to pop up.

Then came the real blow. By the end of 2024, Gensol had unpaid loans of ₹470 crores towards IREDA. As a result, credit ratings agencies, including CARE and ICRA downgraded Gensol’s debt to default status, accusing it of hiding key financial details. And that naturally sent Gensol’s stock price nosediving, forcing the company to make a tough call.

It had to eventually decide to sell off nearly 3,000 EVs to Refex Green Mobility to cut its debt. But then, Refex called off that deal a few days ago, which has put BluSmart in deeper trouble. It has to find a different way out to pare its debt.

And with Gensol out of the picture, BluSmart is also struggling to raise funds.

But there’s another question here: Did BluSmart get an unfair advantage all along?

See, the thing is that with Gensol financing its expansion and providing cars, BluSmart had a relatively easy ride. But now that its closest ally is gone, it has little leverage in securing favourable lease terms. And with its losses mounting to ₹215 crores in FY23 along with mounting complaints from poor customer service, things are getting tougher.

Although BluSmart says that it has diversified its leasing partnerships with Orix, Kinto and Mahindra & Mahindra, however, with over a third of its fleet coming from Gensol, which is now out of the equation, its ability to scale independently is in question.

So this was the long and short of it.

All things aside, at the heart of it all lies a broader entrepreneurial lesson.

As Sundeep Khanna from Mint pointed out about Gensol and BluSmart, as a cautionary tale of spreading too thin. In easy terms, expanding into related businesses can fuel innovation and create operational synergies. But when companies diversify into entirely unrelated sectors, things can go downhill fast. 

In this case, running two capital-intensive businesses, EV leasing and ride-hailing, may have stretched Anmol Singh Jaggi beyond his limits.

The lesson here is diversification works best when businesses stay within their circle of competence. Unrelated expansions may look lucrative at first, but they often lead to governance lapses, financial mismanagement and, ultimately, a house of cards waiting to collapse. (We must also note that this theory may not always hold true!) 

That said, we’re not here to pass verdicts. Gensol could still be cleared of any wrongdoing. But the damage is already done. Gensol’s stock has tanked, BluSmart is scrambling, and investors are questioning the business model itself.

So now, the question remains. Can BluSmart truly stand on its own, or was it always just riding on borrowed time?

Only time will tell.

Until then…

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Note: An earlier version of this story wrongly mentioned that Gensol Engineering had sold nearly 3,000 EVs to Refex Engineering. But the deal was still a work in progress and was called off on 28th March 2025. We regret the error and have now corrected the story to reflect the changes.

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