BluSmart-Linked Gensol’s Independent Director Arun Menon Quits Amid SEBI Probe

With Gensol Engineering under the lens of markets regulator SEBI, its independent director Arun Menon has resigned with immediate effect, citing concerns over the “debt position of the company.”

In his resignation letter addressed to promoter Anmol Singh Jaggi, Menon said, “There was growing concern on the leveraging of GEL balance sheet to fund the capex of other businesses; and the sustainability of servicing such high debt costs by GEL.”

Menon’s resignation follows SEBI’s decision to ban Gensol promoters – Anmol Singh Jaggi and Puneet Singh Jaggi – from acting as directors or key managerial personnel in any listed company. The Jaggi brothers are also the cofounders of electric ride-hailing startup BluSmart.

The market watchdog has also barred Gensol and related entities from the stock market until further notice. The crackdown on Gensol came after SEBI conducted a detailed probe into the listed solar energy company amid complaints about stock price manipulation and debt defaults.

BluSmart Stuck In Limbo Amid Gensol Fraud

In its strongly worded interim order dated April 15, the markets regulator said there was a complete breakdown of internal controls and corporate governance norms in Gensol. “The founders were running a listed public company as if it were a proprietary firm.”

Founded in 2012, Gensol is a major player in the solar engineering, procurement and construction space. Over the past few years, it has also diversified into the electric mobility sector.  The listed company procured EVs and leased them to its electric cab-hailing startup BluSmart. 

Notably, Gensol secured term loans worth INR 977.75 Cr from IRDEA and PFC for buying electric vehicles (EVs). However, SEBI alleged that the cofounders diverted corporate funds and bought a high-end apartment in The Camellias, DLF Gurugram, using money allocated for EVs.

The Jaggi brothers are accused of misusing about INR 262 Cr sanctioned for the procurement of EVs and splurging them on personal expenses, including high-end real estate, paying off credit card bills and transferring money to close relatives. 

SEBI has also put Gensol’s 1:1 stock split on hold and ordered a forensic audit of the books of the company and related entities, which includes BluSmart. Read our full coverage of the Gensol fraud here.

The trouble at Gensol Engineering seems to have spilled over to BluSmart, which abruptly suspended its cab scheduling services in Delhi NCR, Mumbai and Bengaluru on April 16. As per media reports, BluSmart wrote an email to customers today, saying it has “temporarily closed bookings” on its app. However, it did not specify the reason behind the move. 

Inc42 has sought comments from BluSmart on why it suspended its electric cab services. The story will be updated on receiving a response.

Earlier this week, it also emerged that BluSmart was set to wind up its ride-hailing services and join hands with rival Uber as its fleet partner. This follows reports that BluSmart defaulted on loans in February and delayed payments of its employees for March amid a cash crunch.