Fresh Trouble For BluSmart As Refex Drops Gensol’s EV Fleet Acquisition Plan

SUMMARY

In a fresh development, Refex Industries has terminated its deal to acquire 2,997 electric vehicles from Gensol Engineering

This comes two months after Gensol’s EV financing arm Gensol EV Lease Pvt Ltd, in January, decided to sell 2,997 EV cars, which were leased to BluSmart

Promoters of Gensol, Anmol Jaggi and Puneet Jaggi, are the cofounders of BluSmart

There seems to be no respite for Gensol Engineering and ride-hailing startup BluSmart. In a fresh development, Refex Industries has terminated its deal to acquire 2,997 electric vehicles from Gensol Engineering.

In an exchange filing today, Refex said its subsidiary Refex Green Mobility Limited (RGML), after constructive discussions and due consideration, has mutually decided with Gensol not to proceed with the proposed transaction for the takeover of vehicles from the latter.

“This decision has been arrived at due to the evolving commitments at both ends, which would make it challenging to conclude the transaction within the originally envisaged timeline. The parties have therefore agreed to not move forward with the transaction at this stage,” the filing said.

This comes two months after Gensol’s EV financing arm Gensol EV Lease Pvt Ltd, in January, decided to sell 2,997 EV cars, which were leased to BluSmart, to RGML. The sale was aimed at reducing Gensol’s debt by INR 315 Cr.

Right after the acquisition, ICRA and CARE downgraded Gensol’s credit rating to D (default/junk) based on the feedback received from the company’s lenders about the ongoing delays in debt servicing.

ICRA even accused Gensol of submitting falsified data and highlighted that BluSmart recently delayed payments for its non-convertible debentures (NCD), which can have an adverse impact on the “financial flexibility and capital raising ability” of Gensol Engineering.

Since then, Gensol’s shares have tanked about 60%.

What Is BluSmart’s Connection With Gensol?

Promoters of Gensol, Anmol Jaggi and Puneet Jaggi, are the cofounders of BluSmart. The brothers onboarded Punit K Goyal as the third cofounder in BluSmart.

In Inc42’s detailed investigation earlier this week, we reported that BluSmart initially grew under the umbrella of Gensol. Later, it was spun off as a separate entity. In fact, BluSmart’s legal entity was earlier called Gensol Mobility Pvt Ltd. We have written in depth about BluSmart’s and Gensol close ties here.

Gensol leased its EV vehicles to BluSmart to operate. Gensol is one of the key suppliers for BluSmart. However, BluSmart said that it has signed deals with Orix, Kinto, Mahindra & Mahindra, among others, to lease EVs.

The troubles at Gensol have put a question mark on BluSmart’s future. The startup’s promoters historically invested in every funding round. With the troubles at Gensol, it remains to be seen if BluSmart can raise fresh funding.

In January, Inc42 reported that BluSmart was in talks to raise $50 Mn in its Series B funding round. However, there have been no further updates on it since then.

BluSmart has raised $180 Mn in a mix of debt and equity funding rounds over the years. The startup counts bp Ventures, Venture Catalysts, Green Frontier Capital, responAbility, Deepika Padukone among its investors. It competes against the likes of Uber, Rapido, and Ola Cabs. In the premium cab-hailing space, the startup competes against Shoffr, Uber Black, and other third-party cab hailing platforms.