Now, BluSmart Ropes In Grant Thornton For Forensic Audit

EV ride-hailing startup BluSmart has reportedly roped in Grant Thornton to conduct a forensic audit of its books after markets regulator SEBI found that two of its cofounders – Anmol Singh Jaggi and Puneet Singh Jaggi – diverted the funds of Gensol Engineering, of which they are the promoters.

The EV startup has brought in Grant Thornton to examine its cash position and track the movement of funds, Reuters reported, citing sources.

As per the report, the cash position of BluSmart is “worrisome” and Grant Thornton has been tasked with finding “where the funds are going” and “whether there was fraud there”.

BluSmart declined to comment on Inc42’s queries on the development. 

Last week, SEBI barred the Jaggi brothers from the stock market and ordered a forensic audit of Gensol, which procured electric vehicles for BluSmart. The markets watchdog also said it would appoint a forensic auditor to examine the books of accounts of Gensol’s related entities.

Amid the deepening crisis at Gensol, Inc42 reported that PE firm Eversource Capital is in talks to acquire BluSmart for around INR 800 Cr to INR 1,000 Cr ($90 Mn to $120 Mn).

Prior to that, BluSmart suspended its cab services across the country. The startup also reportedly delayed March salaries of nearly 500 employees due to a cash crunch.

SEBI’s Shocking Findings 

In its interim order dated April 15, SEBI restrained the Jaggi brothers from holding the position of a director in Gensol or any other listed company.

As per the order, Gensol secured term loans of nearly INR 978 Cr from government-backed lenders IRDEA and PFC between FY22 and FY24. Of this, INR 664 Cr was sanctioned for purchasing 6,400 EVs. However, the listed company only bought 4,704 EVs at a total cost of INR 568 Cr.

SEBI alleged that the promoters of Gensol diverted corporate funds to the tune of INR 262 Cr meant for buying EVs and misused it for personal use, including buying a luxury apartment, paying off credit card bills and transferring money to close relatives.

The markets regulator further alleged that Gensol misled credit rating agencies, lenders and investors by falsifying documents to prove there was no loan default, when, in fact, the company defaulted on the loans on multiple instances. 

As per SEBI’s findings, Gensol and its promoters and promoter-related entities also funded Wellray Solar Industries, closely linked to the Jaggi brothers, for trading in the shares of Gensol.

As a result, SEBI also restrained Gensol from conducting its 1:10 stock split approved last week. 

Adding to its troubles, Gensol’s lenders IRDEA and PFC are reportedly considering taking legal action against the company to recover their funds.