Gensol Engineering Ltd also informed the same to the exchanges. Shares of Refex ended 1.6% higher the next day, while shares of Gensol remained unchanged.
This transaction came under the spotlight after Gensol, a solar engineering, procurement and electric vehicle (EV) financing company, saw two rating agencies downgrade its borrowing to default earlier this month. Rating agency Icra even said Gensol is falsifying statements.
Gensol denies any wrongdoing and claims that this sale should help reduce its debt, from ₹1,146 crore to ₹831 crore.
Many unanswered questions linger, particularly around the company’s ties with the privately held Blu-Smart Mobility Ltd, the electric cab-hailing service. Blu-Smart was co-founded by Anmol Singh Jaggi; the 39-year-old is also the chairman and managing director of Gensol.
In Gensol’s EV financing business, the company buys cars and then leases them to other companies. Gensol acknowledges that it owns 2,997 EVs that are part of Blu-Smart’s fleet. But that’s not the complete story—Blu-Smart’s fleet consists of 8,000 cars and Gensol, according to people Mint spoke to, owns a meaty share of this number.
While Gensol didn’t disclose the overall number of cars it owns, and the number it leased to Blu-Smart, the company stated that multiple lessors lease out vehicles to the ride hailing company.
According to two investors courted by Blu-Smart, two board members, and one proxy advisory firm executive, Gensol’s lack of transparency about its close ties with the cab-hailing company, particularly around the money spent on cars and loans granted, raises questions around Gensol’s corporate governance practices. Essential details, including the terms of lease partnerships, remain shrouded in mystery.
Above all, a Mint investigation reveals that Gensol’s balance sheet has been used to build Blu-Smart’s business even as the cab-hailing company continues to be a privately owned one.
Mint reviewed Gensol and Blu-Smart’s financials, including an investment proposal made by the electric cab-hailing service to prospective investors in October last year. We also spoke with seven executives to piece together this story.
Growing together
Jaggi founded Gensol in 2012 as a strategic advisory firm. By 2017, he started a solar engineering and procurement business. Two years later, in 2019, Gensol went public. The same year, Jaggi started a new business division, Gensol EV Lease Pvt. Ltd, to finance EVs. Outside of Gensol, in 2019, Jaggi also set up Blu-Smart Mobility Ltd.
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First, let us examine Gensol’s EV lease business and Blu-Smart’s journey to understand the ties between the two firms better.
Up until 2022, Gensol’s EV lease business was almost a non-starter. According to Gensol’s investor presentations, the business reported ₹4 crore in revenue in FY20; ₹3 crore in FY21, and ₹5 crore in FY22. By the end of March 2022, the EV business owned a little over 700 cars, according to a former Gensol executive who didn’t want to be identified.
According to the same executive, Blu-Smart started with 70 cars in 2019. In its early days, it received a $3 million investment from angel investors. By March 2021, it had 400 cars and hit an annual recurring revenue (ARR) of $1 million. The number of cars on its platform more than doubled to 900 in FY22, when its ARR touched $8 million.
Gensol’s EV business showed its first real growth in FY23 when it reported ₹41 crore in revenue, followed by ₹134 crore in FY24.
Growth at Blu-Smart also picked up during this time. It ended FY23 with 3,100 cars and an annual revenue rate of $29 million, while the number of cars more than doubled to 7,300 last year. Its ARR totalled $60 million.
In April-December 2024, 72.3%, or ₹764 crore, of Gensol’s ₹1,056 crore revenue was generated from the solar EPC business. The remaining 27.7%, or ₹294, came from the EV leasing arm, according to the company’s latest investor presentation.
Gensol was, and continues to be, Blu-Smart’s largest car supplier, accounting for over 87% of its 8,000 fleet, according to a former Gensol executive who didn’t want to be identified. Consequently, Blu-Smart has emerged as Gensol’s largest customer for its EV lease business, accounting for over 90% of the ₹294 crore business it received in the first nine months of the current financial year, the executive further mentioned.
The fuel
So, where did Gensol get the money from to expand its EV leasing business, which, in turn, fuelled Jaggi’s privately held electric cab business?
In 2021, Gensol first received ₹35.55 crore from the Indian Renewable Energy Development Agency Ltd (Ireda), a state-owned company, for its EV lease business. In August 2022, Gensol told investors that it had received Ireda’s nod to buy 3,000 EVs. In January last year, Gensol said that Ireda had sanctioned a fatter loan— ₹513 crore—one that would allow the company to finance 3,800 EVs.
An Ireda spokesperson told Mint that Gensol has utilized the loans given to finance cars for Blu-Smart Mobility. This implies that Ireda knew Gensol was building an EV ride-hailing business through Blu-Smart.
At the end of December 2024, Ireda had unpaid loans of ₹470 crore from Gensol, according to Icra, the ratings agency.
The model
Why couldn’t Ireda give loans to Blu-Smart directly?
Probably because Blu-Smart always wanted to remain an asset-light business.
“No Asset Ownership Burden—Company Managed Cars”, Blu-Smart claims on the third page of its 25-page investment deck sent to prospective investors in October 2024. Mint reviewed a copy of this document. The privately-held firm is yet to file its financials with the ministry of corporate affairs for the year ending March 2024.
According to this investor presentation, Blu-Smart had 8,000 cars as on 31 September 2024.
Gensol, meanwhile, didn’t tell Mint how many cars it owns overall, limiting its commentary to the transaction it inked with Refex in January this year.
“Gensol is the owner of these 2,997 cars and post the transaction, Refex would be leasing the same vehicles to BluSmart,” said a spokesperson for Gensol. “Gensol Engineering Ltd (GEL), was an early supporter of BluSmart’s EV mission and as BluSmart has increased its presence, multiple more lessors have now leased vehicles to BluSmart,” the spokesperson added.
Apart from Gensol (which owns over 87% or about 7,000 of Blu-Smart’s fleet), other leasers include state-owned Energy Efficiency Services Ltd and Quiklyz, the vehicle leasing and subscription business of Mahindra & Mahindra Financial Services Ltd.
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The loans
Gensol buys cars, leases them to Blu-Smart, and tops it up with more loans to the private cab-hailing company.
The important thing which has not been reported until now is that Gensol spent ₹568 crore in the three years to March 2024 to buy electric cars, according to a review of the company’s annual reports by Mint. In FY24 alone, Gensol spent ₹352.14 crore to buy cars.
Gensol granted ₹148.33 crore as loans to three Blu-Smart subsidiaries in the year ended March 2024: Blu-Smart Fleet Pvt. Ltd received ₹138.87 crore while Blu-Smart Mobility Pvt. Ltd and Blu-Smart Mobility Tech Pvt. Ltd received ₹9.19 crore and ₹0.27 crore, respectively.
Simply put, Gensol spent over ₹500 crore last year to build Blu-Smart, considering that most of the cars bought by the firm in 2024 ( ₹352.14 crore) were also leased to the ride hailing firm.
This is not a small amount considering that on 3 March, Care Ratings Ltd downgraded Gensol’s ₹716 crore bank loan to default, citing delays in “servicing of term loan obligations”.
Subsequently, Gensol termed it a temporary financial crunch and assured investors it would tide over these problems. The company’s shares closed at ₹262.25 on 13 March, down 67% from a year ago.
The questions
The close ties between the two firms have raised questions over corporate governance.
“What is the nature of these loans given to Blu-Smart (by Gensol)? Are these loans secured or unsecured? What is the underlying security backing these loans?” asked Nitin Mangal, a Mumbai-based analyst who runs Trudence Capital Advisors Pvt. Ltd, a Sebi-registered research firm.
Gensol didn’t answer Mint’s questions on the nature of the loans given to Blu-Smart.
“All material relationships between Gensol and BluSmart have been appropriately disclosed to both the Boards, the statutory auditors, lenders and the shareholders,” said a spokesperson for Gensol.
Nonetheless, some large investors appear to be keeping a distance from the two firms given their close ties.
“In our due diligence of Gensol, we saw the close ties. This was one of the reasons why we decided not to invest in the company,” said the head of a Mumbai-based portfolio management services firm who didn’t want to be identified. The executive met with Anmol Jaggi and the senior management team in July 2021.
What is the nature of these loans given to Blu-Smart (by Gensol)? Are these loans secured or unsecured?
—Nitin Mangal
Jaggi and his family owned 62.65% of Gensol (at the end of December 2024). Retail investors or individuals owning less than ₹2 lakh worth of shares owned about a fourth or 23.44%, while individuals owning more than ₹2 lakh worth of shares own 7.1% in the company. Non-resident Indians, corporate bodies and family offices own 5.44%. No foreign institutional investor, mutual fund or insurance company is an investor in Gensol.
The Enforcement Directorate has taken control of the remaining 1.37% shares—they were previously owned by Hari Shankar Tibrewala, along with 13 other companies. This came in the aftermath of the financial crime investigation agency probing an alleged small-cap stock market manipulation fraud.
A puzzling nature of the ties between Gensol and Blu-Smart is that even though Gensol describes transactions with Blu-Smart as ‘related-party transactions’, Blu-Smart hasn’t reported its financial ties with Gensol as ‘transactions with connected parties’ in its filings with the ministry of corporate affairs.
“Gensol is a listed company. Transparency and trust are more important, and the audit committee chair, along with independent directors, should come clean and provide all information to investors,” said V. Balakrishnan, a former chief financial officer at Infosys Ltd and founder of Exfinity Ventures, a venture capital fund.
“All these transactions, including giving loans to Blu-Smart and Matrix Gas and Renewables ( ₹231.85 crore in loan in 2023-24), are reminiscent of how Vijay Mallya used the cash of the liquor business for the aviation business. The problematic issue in Gensol’s case is that the lease conditions under which Gensol is leasing out its cars to Blu-Smart have not been disclosed, and so minority shareholders of Gensol are the ones losing out,” said Shriram Subramanian, founder and managing director of InGovern Research Services Pvt. Ltd, a proxy advisory firm.
Listing dreams
Such disclosures are especially needed since Blu-Smart has listing dreams.
Beginning September 2024, Blu-Smart has been looking to raise $50 million ( ₹418 crore) at a pre-money valuation of $335 million. It told investors it expects to go public in the second half of next year.
Gensol’s current problems could cripple that plan of going public. It is important to mention that weeks before Gensol’s issues surfaced publicly, Blu-Smart defaulted on ₹30 crore worth of bonds—in early February.
This brings us back to the transaction of Refex buying 2,997 cars from Gensol. Refex Industries is a Chennai-based public company that trades coal, handles ash, and manufactures and re-fills refrigerant gases. Refex Green buys 2,997 cars and immediately leases them to Blu-Smart Mobility. Why?
“[W]e have acquired the vehicle from Gensol and we will be giving it to BluSmart only. So, for us, it will be a monthly payment of lease rental for these vehicles,” Refex’s managing director Anil Jain told analysts in a post-earnings interaction dated 27 January.
It is unknown whether Blu-Smart, which defaulted on a ₹30 crore bond last month, can service the contract with Refex.
“This essentially is an asset (2,997 cars) and liability ( ₹315 crore loan) transaction through which Gensol is looking to clean up its book. Gensol could have sold these cars to Blu-Smart. But we don’t know the financial position of Blu-Smart, and for this reason, Refex steps in,” said Mangal.
A questionnaire sent to Refex’s chief financial officer, Dinesh Kumar Agarwal, went unanswered.
Refex said it is buying these 2,997 cars at book value. At ₹315 crore, the average price of a car is ₹10.5 lakh. Book value is the difference between the cost of a car and the depreciation that has occurred over time. Most new electric vehicles sell between ₹10 and ₹15 lakh. Even assuming a 20% depreciation in the first year, it is unclear how Gensol and Refex arrived at ₹10.5 lakh for the cars running under the Blu-Smart brand.
In addition, there is little clarity on whose loan Refex is taking over. There is no cash involved in the transaction—Refex takes on Gensol’s ₹315 crore loan.
A spokesperson from Ireda told Mint that its loan to Gensol is not being transferred. Other creditors include Power Finance Corp. Ltd (loans of ₹334.8 crore); HDFC Bank Ltd ( ₹26.4 crore); Tata Motors Finance Ltd ( ₹18.3 crore); and Axis Bank Ltd ( ₹15 crore).
It is unclear if Gensol and Refex have received approval from the creditors to transfer this loan.
“The specific transaction is under the process of getting all necessary approvals,” said a spokesperson from Gensol.
Anmol Jaggi’s plans to do things too fast (take on Uber and change the face of India’s cab hailing market) may have landed Gensol in a difficult spot for now, Subramanian of InGovern said.
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