BluSmart Startup Fraud: A Cautionary Tale from India’s EV Sector

In recent years, India has seen a surge in innovative startups aiming to solve real-world problems. Among them was BluSmart, which launched in 2019 with a promise to provide sustainable, electric ride-hailing services across Delhi-NCR. But what began as a dream project turned into a cautionary story of deception, financial mismanagement, and regulatory action.

The Dream and the Deception

BluSmart was co-founded by brothers Anmol and Puneet Singh Jaggi. The company quickly positioned itself as India’s first all-electric cab service, claiming to revolutionize urban mobility. Their business model was built on promoting green energy, reducing emissions, and offering a smarter transport option compared to fuel-guzzling rideshare rivals.

But behind the scenes, troubling activities were taking place.

Misuse of Public Funds

To scale the business, BluSmart secured loans totaling over ₹978 crore (approximately $114 million) from government-backed institutions like the Indian Renewable Energy Development Agency (IREDA) and the Power Finance Corporation (PFC). These loans were meant to fund the purchase of electric vehicles and charging infrastructure to support their mission.

However, investigations revealed that a significant portion of these funds was misused. Instead of being invested in the business, large amounts were diverted for personal luxuries by the Jaggi brothers.

SEBI's Crackdown

On April 15, 2025, the Securities and Exchange Board of India (SEBI) intervened. After a detailed forensic investigation, SEBI found that the Jaggis had systematically siphoned off funds from Gensol Engineering Ltd.—a listed entity with close ties to BluSmart—for their personal benefit.

The fraudulent transactions were masked under inflated invoices, non-existent consultancy contracts, and artificially inflated project costs. SEBI uncovered that over ₹33 crore was funneled through these mechanisms over a span of two years. A part of this money was used to purchase a luxury apartment worth ₹18 crore in Gurugram’s upscale DLF Camellias. The property was not disclosed to shareholders or the board, violating multiple corporate governance norms.

Further, SEBI discovered that personal expenses—such as international vacations, luxury cars, high-end watches, and private chartered flights—were being reimbursed as "business development" costs by Gensol. Fake vendor companies were created to move money in and out of the system, making it look like operational spend.

Emails and internal communications accessed by SEBI showed a clear intent to deceive auditors and stakeholders. In one such email, a senior finance executive warned the Jaggi brothers of the consequences, but was later removed from his position and made to sign an NDA.

In its official statement, SEBI condemned the misuse, stating that the promoters had "treated the listed entity like a private enterprise, lacking any concern for shareholders or fiduciary responsibilities." As a result:

• Both Anmol and Puneet Singh Jaggi were barred from serving as directors or holding any managerial or decision-making roles in any listed company for a period of 10 years.

• A freeze was ordered on their personal and business bank accounts until the completion of the recovery proceedings.

• SEBI instructed Gensol to conduct an independent audit of all transactions made in the past three financial years.

The regulator also proposed a criminal investigation under the Prevention of Money Laundering Act (PMLA) and initiated coordination with the Enforcement Directorate (ED) to trace any foreign assets held by the Jaggis.

Impact on the Companies and Investors

The repercussions were swift and severe:

 
•  Credit Downgrade: Gensol’s credit rating was downgraded due to weak governance and financial instability.
•  Stock Crash: Gensol’s stock nosedived by nearly 75% in a matter of weeks.
•  Stake Dump: Promoters were forced to offload around 2.4% of their stake in the company.
•  Delayed Salaries: BluSmart employees began facing payment delays, hinting at deeper financial trouble.

Strategic Shift Under Duress

With public trust eroding and financial pressure mounting, BluSmart announced a sudden shift in business strategy. The company decided to stop operating its own ride-hailing service and instead become a fleet partner for Uber. This move was seen as a desperate attempt to salvage what remained of the business.

Lessons from the BluSmart Scandal

The BluSmart fraud isn’t just about one failed startup—it’s a wake-up call for India’s growing entrepreneurial ecosystem. Here are key takeaways:

 
•  Due Diligence Matters: Investors and public institutions need better checks before handing out large sums.
•  Corporate Governance Must Be Strict: Founders must be held accountable when they misuse public money.
•  Transparency Builds Trust: Startups that deal with public or investor funds must maintain full transparency.

Conclusion

BluSmart’s story is a powerful reminder that no matter how noble your mission sounds—if ethics and accountability are compromised, the downfall is inevitable. Anmol and Puneet Singh Jaggi’s misuse of public funds, their disregard for governance, and the eventual collapse of their reputation serve as a lesson for every aspiring entrepreneur: building a startup is not just about innovation—it's about integrity.

As the investigation continues, the Indian startup community will be watching closely. Not just to see what penalties are enforced, but to reflect on how to protect the ecosystem from similar frauds in the future.