BluSmart Set for $30M Lifeline as Investors Plan Revival Push

According to reports, BluSmart's current backers, which include BP Ventures and ResponsAbility Investments, intend to provide $30 million (INR 253.64 Cr) to help the electric taxi hailing business get back on its feet.

According to media reports, the money will be in the form of unsecured debt and will assist the business in covering its operating commitments, such as outstanding debts and employee salaries. According to the article, the investment proposal is contingent upon the resignation of co-founder Anmol Singh Jaggi.

Why Brand Shut Down its Operations?

After Gensol Engineering was accused of document falsification, share price manipulation, and embezzlement for personal indulgences by its promoters, Anmol Singh Jaggi and Puneet Singh Jaggi, SEBI issued an interim order, which caused the ride-hailing startup to halt operations.

As a result, 10,000 of its drivers lost their jobs. Earlier this month, over 80 of these drivers gathered at Delhi's Jantar Mantar to express their displeasure and call for government action.

The predicament of BluSmart demonstrates the disastrous effects of governance problems in businesses that need a significant amount of operating money. About 2.5 billion Indian rupees (about $30 million) are still owed to the company, and 8,700 electric cars are left unattended, putting their batteries and other parts at risk of deterioration.

 In the Indian startup scene, where businesses frequently put expansion ahead of accountability frameworks, this pattern of governance issues impacting funding and operations is typical. Effective governance is crucial for preserving investor trust, according to research, especially in industries like electric mobility that need constant capital infusion.

Many companies still find it difficult to put strong structures in place early in their lives, despite the 2013 Companies Act's introduction of provisions to boost governance.

Despite having previously secured a sizable investment, BluSmart's situation illustrates how governance failures can swiftly lead to operational breakdown, with employees going underpaid and services suspended.

Roadblocks of India’s EV Taxi Market

Data indicates that, notwithstanding BluSmart's issues, electric taxis have strong operational benefits, with energy costs of INR 0.82/km as opposed to INR 6.50/km for diesel vehicles. These economics contribute to the explanation of the significant future potential of the worldwide EV taxi business, which is expected to increase from $24.59 billion in 2024 to $80.77 billion by 2034.

The problem at BluSmart, however, highlights the extremely narrow operating margins and intricate infrastructure requirements that make EV fleet operations especially susceptible to interruption. BluSmart's fleet of 8,700 abandoned cars shows how much of its valuable assets are in danger when operations stop, leading to a series of issues that go beyond a simple outage.

For EV fleets to succeed, dedicated charging infrastructure is still necessary. Inadequate infrastructure can lead to operational bottlenecks that can swiftly turn into major failure spots. Indian ride-hailing businesses face significant obstacles as they compete in a market worth $13.4–15 billion, which is still controlled by established players like Ola and Uber.