ED Detains BluSmart Cofounder Puneet Jaggi

The Enforcement Directorate reportedly detained BluSmart cofounder Puneet Singh Jaggi from a hotel in New Delhi today.

As per news agency PTI, Jaggi was picked up on the same day on which the ED conducted raids at multiple premises linked to his company Gensol Engineering. As per the report, the searches were carried out at the company’s premises in Delhi, Gurugram and Ahmedabad under the provisions of the Foreign Exchange Management Act (FEMA).

While Jaggi was detained by the ED from a Delhi hotel, sources told the news agency that his sibling and another BluSmart cofounder Anmol Jaggi is currently in Dubai.

The development comes days after SEBI, in an interim order, said that the brothers misutilised Gensol’s funds in a fraudulent manner and treated the capital as their “piggybank”. The report also noted that the duo used the company’s funds .

The ED crackdown was based on the SEBI order, , obtained from Power Finance Corporation and Indian Renewable Energy Development Agency (IREDA) for the purpose of procuring EVs for BluSmart and EPC contracts, for “purchasing the assets in personal name of promoters or their relatives or in various shell entities floated by the group”.

Inc42 has reached out to Gensol for comments on the development. The story will be updated on receiving a response.

The Mahadev App Scam Connection?

Notably, the development comes just a day after reports surfaced that the ED was preparing to question Jaggi brothers in connection with its ongoing probe into the INR 20,000 Cr Mahadev Book betting app scam.

As per a report, the directorate recently froze over 5 Lakh shares of Gensol Engineering over suspicions that Dubai-based Zenith Multi Trading DMCC manipulated the prices of the Gensol stock.

“The probe has revealed stock manipulation using tainted funds in the Mahadev app case, which were received in Gensol Engineering through the FPI (foreign portfolio investor) routes. The probe will ascertain whether the promoters were aware of this fact,” an unnamed senior government official reportedly said.

So, What Does This Mean For BluSmart?

Puneet Jaggi’s detention is also expected to spell trouble for the EV ride-hailing startup. While Eversource Capital was previously said to be in talks to buy the EV ride-hailing startup for INR 800 Cr-INR 1,000 Cr in a fire sale, the involvement of law enforcement agencies and allegations of forex violations could play a spoilsport for a potential deal.

For context, the fire sale valuation represented a 60% decline from its last valuation of about $300 Mn.

Further, in a recent social media post, BluSmart cofounder Punit K Goyal distanced himself from the Jaggi brothers. On top of this, there is the “worrisome” cash position of BluSmart and Grant Thornton’s audit of the ride-hailing startup’s books, which could reveal a bigger rot at the heart of the startup’s operations.

As if this was enough, the startup is yet to pay employee salaries for the month of March and, in the absence of a fresh fundraise, it could falter on its salary obligations for this month too. Additionally, with services suspended, BluSmart seems to be caught in a vicious loop of cash crunch with no revenue generation.

BluSmart came under the scanner of regulators earlier this month after SEBI, in an interim order, said that its related entity Gensol’s promoters Anmol Singh Jaggi and Puneet Singh Jaggi allegedly embezzled funds for personal spending and other investments. In its interim order, SEBI said that it would order an audit of the books of Gensol, as well as its related entities.

While Gensol is said to have availed term loans to the tune of INR 977.75 Cr between FY22 and FY24, INR 663.89 Cr of the proceeds was to be utilised to buy 6,400 EVs to be leased to BluSmart. However, Gensol only purchased 4,704 vehicles for INR 567.73 Cr, as per SEBI, while INR 262.13 Cr is still unaccounted for.

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