By Aditya Kalra and Aditi Shah
NEW DELHI (Reuters) -Indian electric cab service BluSmart, seen as a rival to Uber, suspended services on Thursday, two days after the country’s market regulator alleged its co-founder misused funds at an affiliate company and bought a luxury apartment with money allocated for electric vehicles.
BluSmart rode India’s clean energy boom but its sudden suspension puts the livelihood of thousands of drivers at risk. With more than 8,000 taxis, it set up charging hubs in cities like New Delhi, Mumbai and Bengaluru to take on Uber and Ola, both ride-hailing services that largely use gasoline-powered fleets.
“We’ve decided to temporarily close bookings on the BluSmart app,” the company said in an e-mail to customers on Thursday, without giving any reasons.
Amid concerns expressed on social media about customer funds blocked in BluSmart wallets, the email said the company will only “initiate a refund within the next 90 days if services do not resume before then.”
BluSmart and the co-founder, Anmol Jaggi, did not respond to Reuters requests for comment. The company, backed by bp ventures, an arm of British oil giant BP, told Reuters in 2023 it had a 9% market share in New Delhi.
The service became hugely popular – especially for airport rides – as BluSmart enticed customers with assurances of cleanliness and reliability. Its drivers, for example, were not allowed to cancel bookings, unlike Uber. The Delhi Airport on Thursday announced BluSmart’s suspension in an advisory.
The suspension put thousands of its drivers without work overnight. After 32-year-old Mohammed Akhlakh completed his last ride in New Delhi late on Wednesday, he was asked by BluSmart officials to bring the car to the nearest hub as there was a “technical issue”, he told Reuters.
“Once I parked the car, I was asked to hand over the keys and not come to work,” said Akhlakh, adding his elderly parents, wife and two children depend on his monthly income of about $400.
The Securities and Exchange Board of India (SEBI) barred Anmol Jaggi and his brother Puneet from the stock market this week and ordered a forensic investigation into their listed solar energy company, Gensol, which used to procure electric vehicles and then lease them for the ride-hailing service.
Anmol Jaggi is one of several co-founders of BluSmart, and the managing director of Gensol.
There is “a complete breakdown of internal controls and corporate governance norms in Gensol … the fund diversion primarily occurred in the context of electric vehicle (EV) purchases intended for leasing to a related party,” SEBI said in its order this week.
“Funds availed by Gensol as loans for procuring EVs were, through layered transactions, partly utilised for buying a high-end apartment in The Camellias, DLF,” for $5 million, it added, referring to one of India’s most expensive luxury apartment complexes.
Other alleged diversion of funds by Anmol Jaggi, according to the market regulator, included utilization of funds for “personal use”, and a $30,379 payment which “appears to be related to purchase of golf set”, the order stated.
Gensol has said it will comply with market regulator’s directives. Its shares are down 85% so far this year.
(Reporting by Aditya Kalra and Aditi Shah; Editing by Raju Gopalakrishnan)
