Can Blusmart Be Rescued From the Gensol Saga? Once hailed as the next game changer in EV Mobility, Blusmart made it to our special IPs last year securing the cover for the momentum it showed.

An Innovation Derailed

In a jolt to India's electric mobility ambitions, EV ride-hailing startup BluSmart suspended services across Delhi NCR, Mumbai, and Bengaluru in April 2025. The company—once hailed as a trailblazer in clean, shared transport—blames the halt on external financial turbulence. But behind the scenes, a more tangled tale of corporate misgovernance is unfolding.

BluSmart's sudden collapse is being seen as collateral damage in the wider fallout of Gensol Engineering Ltd., a partner that supplied its electric vehicles. The trigger: a Securities and Exchange Board of India (SEBI) probe that unearthed a massive fund diversion scandal tied to one of BluSmart's own co-founders.

Gensol's Fall from Grace

Founded as a solar EPC and consulting firm, Gensol Engineering evolved into EV leasing and rapidly expanded. But that growth was marred by reckless borrowing— over₹1,000 crore by 2024—and alleged financial misconduct. According to SEBI's interim order, Anmol Singh Jaggi, co-founder of both Gensol and BluSmart, and his brother Puneet Singh Jaggi, diverted 978 crore earmarked for electric vehicle purchases into personal luxuries. These included premium real estate and even a luxury golf set.

The regulator described a "complete breakdown of internal controls", barred both Jaggi brothers from board positions, and ordered a forensic audit of Gensol, now underway by Grant Thornton.

BLUSMART'S MODEL IN CRISIS

At the heart of BluSmart's shutdown lies its fleet leasing model. The startup did not own most of its EVs—instead, it leased them from Gensol. With Gensol under scrutiny and financing frozen, BluSmart lost access to its fleet, crippling its ability to operate.

Though the BluSmart app remains active, users cannot book rides. The company has promised to refund wallet balances within 90 days if services remain offline beyond May 7, but skepticism is growing. Driver-partners have also been impacted, with thousands now out of work, some tied to EV leases they cannot repay or use.

EXCLUSIVE: A CHANGE OF HANDS AHEAD?

In an interaction with Entrepreneur India, a top executive from BluSmart, stressed that "the two are completely separate"—referring to Gensol and BluSmart. He also hinted at a potential ownership restructuring, possibly involving Eversource Capital, though at a significantly reduced valuation (reportedly 60% lower).

Still, many investors were reluctant to go on record. The mood across the ecosystem is one of caution, if not outright concern.

ROMA PRIYA, FOUNDER AND CEO OF BURGEON LAW

"In a rapidly expanding entrepreneurial landscape, it is becoming increasingly important for emerging companies to integrate robust governance and compliance practices from an early stage. As businesses scale, aligning operational transparency with legal and regulatory expectations helps build long-term credibility with stakeholders. The current environment serves as a reminder that sustainable growth is best supported by a strong foundation of accountability, responsible financial management, and strategic legal foresight," said Roma Priya, Founder and CEO of Burgeon Law.

THE RIPPLE EFFECT ON INDIA'S STARTUP SCENE

The crisis has ignited wider debate in the startup and investor community. Rating agencies ICRA and CARE have downgraded Gensol over governance concerns and signs of document falsification. Gensol's stock has plunged nearly 90%, and the company has received warnings from both BSE and NSE for disclosure lapses.

As India positions itself as a global leader in EV adoption and green mobility, the BluSmart-Gensol saga raises urgent questions about transparency, inter-company governance, and the risks of vertically integrated startup models.

While sharing his reaction on Linkedin Aman Gupta, Co Founder and CMO at Boat Lifestyle shared, "The BluSmart situation is tough. Sad for everyone involved. But also a much-needed reality check for all of us in the ecosystem. I know what it feels like: - Investors lost money - Employees lost stability - And customers lost a service they genuinely loved (Hope they get the money in Blusmart wallet) But more than that, this has also dented trust in the ecosystem. What matters is how we as a country and ecosystem bounce back. The Indian startup ecosystem is resilient. We always rise stronger. And we will this time too."

For all founders, here's the biggest takeaway: Compliance and ethics aren't boxes to tick. They're the foundation. Being a CA, I've seen this up close: Clean books, Timely audits, Transparent reporting. All so called "not so cool tasks" make businesses sustainable."

Sabeer Bhatia, Co-founder at Showreel also wrote on Linkedin, "There's been a lot of noise around BluSmart and alleged misuse of funds. Golf club memberships, luxury apartments—media headlines love these stories! Whether they're true or not is still unclear. But here's what concerns me more: We're judging the ENTIRE startup ecosystem before the facts are even on the table. This isn't just about one company.

Let's be clear: if there's misconduct, it should be investigated andaddressed. But painting EVERY founder with the same brush? That's reckless. Startups are built on risk. Boldness. Imperfect bets. The more we turn the spotlight into a searchlight, the less room we give founders to think big. Public perception matters. Trust fuels capital. And both die fast in a climate of paranoia. Let's fix what's broken—but let's not burn down what's being built.

WHAT HAPPENS NEXT?

BluSmart's survival now depends on: The outcome of SEBI's forensic audit.Its ability to secure fresh capital or restructure under new ownership. Regaining the trust of users, drivers, and regulators alike.

Whether it emerges recharged or written off, BluSmart's story is now a case study in how startup dreams can falter when finance outpaces accountability.

Was BluSmart an unfortunate casualty— or complicit through silence? The coming months will reveal whether this is the rebirth of a green mobility pioneer or the fall of a promising unicorn undone by its own foundation.