After Sebi Investigation, BluSmart Selects Grant Thornton for Forensic Audit

Following a regulatory investigation into co-founder Anmol Jaggi's suspected financial fraud, electric taxi service BluSmart has hired Grant Thornton. According to a media agency report on 23 April, Grant Thornton will perform a forensic audit of BluSmart's business operations.

The action follows Jaggi's exclusion from the securities market by the Securities and Exchange Board of India (Sebi) due to allegations that he had misappropriated money intended for the purchase of electric vehicles. According to a media outlet, Grant Thornton will be looking into BluSmart's financial situation, paying particular attention to how money is moved and used.

The report went on to say that the company's cash balance looked worrisome and suggested fraud. The auditing firm's nomination represents the company's effort to rebuild trust and transparency in the face of growing scrutiny.

How Sebi Detected the Fraud?

When Sebi discovered that Jaggi had allegedly diverted money from his publicly traded company, Gensol Engineering, an EV procurement company that leased cars to BluSmart, for personal expenses, the crisis broke out.

In addition to other indulgences like international travel, golf equipment, luxury goods and payments to family accounts, these included the acquisition of a lavish flat in Gurgaon's DLF Camellias for INR 42 crore. The alleged fraud stems from a loan of INR 978 crore that was given for the purchase of 6,400 electric vehicles by the state-backed organisations Power Finance Corporation (PFC) and Indian Renewable Energy Development Agency (Ireda).

Only 4,704 were purchased, according to the market regulator's findings, leaving an INR 262 crore gap that is thought to have been stolen. In India, BluSmart, a new ride-hailing company that competes with Uber and Ola, ran more than 8,000 electric cabs and built a sizable charging network in Bengaluru, Delhi, and Mumbai. It claimed a 9% market share in the capital city in 2023.

BluSmart a Sinking Ship

Numerous senior officials at BluSmart resigned after the scandal at Gensol Engineering. Many users who still had money in their app wallets were left in a state of uncertainty when the company abruptly stopped providing taxi services. The business has made an effort to reassure clients that they will be operational once more.

BluSmart has not yet released an official statement regarding the situation. Important backer BP Ventures, a division of the British energy behemoth BP, had also said nothing about the events. The scope of financial violations should be clarified by the forensic audit, which will also assist in deciding the best course of action for the struggling taxi app.

However, Eversource, a private equity firm, has made an offer to purchase BluSmart for between INR 800 and 1,000 crore. Eversource Capital is a climate-focused investment platform. If the purchase goes through, BluSmart's last known valuation of $300 million (about INR 2,561 crore) would be at least 60% lower.

 According to the media filings, Eversource intends to combine BluSmart with Lithium Urban Technologies, a company in its portfolio, and invest roughly $100 million in the resulting company.