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The scandal has rocked India’s startup ecosystem, and it is a shocking and deeply disappointing one. BluSmart’s promoters, who are in electric vehicle (EV) mobility, have been exposed by the Securities and Exchange Board of India (SEBI) in what has been termed as a massive fraud. The financial mismanagement is one thing, but the industry is actually being exposed to a serious breach because the role of raising capital is clearly not creating real value.
How did BluSmart use the raised money for personal use?
BluSmart, which operates a wide fleet of electric cabs in various cities across Delhi, Mumbai and Bengaluru has been counted as one of the fast growing green mobility startups in India. The company also had loans worth nearly Rs 978 crore from public sector lenders IREDA and PFC by way of loans taken by its close partner Gensol Engineering. These funds were meant to purchase more than 6,000 electric vehicles for BluSmart’s operations.
According to Money Control, the promoters Anmol and Puneet Singh Jaggi diverted about Rs.262 crore out of Rs.900 crore loan meant for procurement of 6,400 EVs to personal luxuries including purchase of a high end apartment in DLF Camellias, Gurgaon. SEBI revealed that of the amount, only 4,704 vehicles were acquired, leaving a huge chunk of the money unaccounted for. In fact, SEBI investigation found that actually only about Rs 600 crore was spent on buying EVs. Shockingly, a sizable portion of this money was used to buy a luxury flat in Gurugram’s upscale DLF Camellias, that offers single apartments from Rs 70 crore.
How was the BluSmart fraud hidden?
The promoters, Anmol Singh Jaggi and Puneet Singh Jaggi, submitted fraudulent documents with the credit rating agencies and lenders to show that the loan repayments were on track and that money was being used as intended. Further scrutiny revealed that the Jaggi brothers had submitted fraudulent documents to credit rating agencies to hide loan repayments delays. The misappropriation of funds went beyond real estate and included luxury items, foreign travel and transfers to relatives.
According to the forensic audit by SEBI, fake invoices were raised, project costs were inflated and non-existent consultancy contracts were made. It even spent money on luxury items, international holidays and private flights all of which were classified as business expenditure. Following these revelations, BluSmart has temporarily stopped its ride hailing services and is said to be transitioning to a fleet partnership model with Uber and rebranding its services under ‘Uber Green’ in Bengaluru. The Jaggi brothers also used shell companies and fake vendor accounts to move money in and out of the company so that it would look like operational spending to cover the misuse.
Future Outlook
In response to this occurrence, the startup community has sent a clear message: integrity and trust are more important than acquiring funds. BluSmart has now discontinued its services in many cities, leaving thousands of drivers and staff in a state of uncertainty. The controversy has been compared to the demise of Byju's, another well-known Indian ed tech company. This serves as an alarming signal that honesty and trust are far more important than fund numbers, quick expansion, and money raising. If the value is to last, founders, staff, and partners must put in their ethical behaviour. The BluSmart case serves as a warning that operations and reputation can be destroyed when money is sought without ethical governance.
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