Alleged Fraud by Founders of E-taxi Start-up in India Spooks Investors

Two brothers behind BluSmart accused of diverting funds to buy luxury items

- Rohini Mohan

BENGALURU - It seemed too good to be true, and it was. Operations at India's biggest electric vehicle (EV) taxi start-up, BluSmart, have come to a screeching halt after two of its founders were accused of defrauding investors and banks to the tune of millions of dollars.

BluSmart Mobility had always stood out in India's high-volume, middling-quality ride-hailing industry. Touting its green credentials, BluSmart's tidy cars, fixed rates with no surge pricing, professional drivers, zero-cancellation policy and punctual pick-ups in Bengaluru, Mumbai and Delhi made it the choice of hundreds of corporate, professional and elderly clients, especially for airport drop-offs and pick-ups.

Unlike other ride-hailing companies like Uber, which are intermediaries between car owners and passengers, BluSmart had more than 8,000 fully owned EVs and drivers on its payroll to sidestep driver reluctance to buy costlier EV cars. Its app has been downloaded more than one million times.

But the service was abruptly suspended on April 16, after India's stock market regulator accused two of the three founders, brothers Anmol and Puneet Singh Jaggi, of financial mismanagement at another of their companies that leased out cars to BluSmart.

An interim order by the Securities and Exchange Board of India (Sebi) on April 15 said the brothers had treated Gensol Engineering - a solar energy solutions firm that owns most of BluSmart's cars - like their personal "piggy bank".

Sebi said they misled investors, lenders, credit rating agencies and regulators with doctored financial statements and forged documents.

Instead of buying EVs, they allegedly diverted some 9.8 billion rupees (S$151 million) borrowed from government institutions to fund luxury expenditures like high-end apartments in Gurgaon's DLF Camellias, premium TaylorMade golf clubs, Titan watches and spa treatments. They also paid for major expenses for their relatives.