BluSmart Bondholders Raise Repayment Concerns as Operations Halt — Here's What Company Owes

Amid allegations of fund misuse by its promoters and the failure to secure $50 million in a fresh funding round, bondholders of EV startup BluSmart Mobility are growing increasingly concerned about repayment. Approximately Rs 80–85 crore worth of bond redemptions are reportedly due between 2025 and 2026.

According to a report by The Economic Times (ET), fintech firms such as debt syndication platform Yubi, wealth-tech startup Centricity, and revenue-based financing company Klub, among others, facilitated the sale of around Rs 100 crore worth of BluSmart Mobility bonds to retail investors and high-net-worth individuals (HNIs) over the past year.

However, with BluSmart's electric ride-hailing operations currently at a standstill—and with an ongoing probe by market regulator SEBI into Gensol Engineering, a company linked to BluSmart through co-founder Anmol Singh Jaggi—bondholders are becoming increasingly uneasy. SEBI’s investigation, triggered by a stock manipulation complaint in June 2024, reportedly found that funds raised by Gensol to procure electric vehicles were allegedly diverted for personal use by Jaggi and his brother, Puneet Singh Jaggi.

Meanwhile, BluSmart has reportedly begun transitioning its fleet to rival ride-hailing platform Uber. In March, it delayed salary payments, and in February, it defaulted on Rs 30 crore worth of bonds, triggering a cross-default clause on its non-convertible debentures.

Despite this, the ET report noted that interest payments on many of the bonds were made on time until recently.

Rs 150–160 crore in repayment obligations

According to the report, BluSmart has annual NCD (non-convertible debenture) repayment obligations amounting to Rs 150–160 crore.

In a recent call with investors, BluSmart’s founder assured them that efforts were underway to stabilize operations. However, many remain skeptical, fearing the worst.

“We received the latest repayment, although it was delayed by a couple of days—it was due on April 14. Now that operations have halted, we fear repayments may stop altogether,” an investor told the newspaper.

BluSmart has also raised additional capital through other financial instruments, including pass-through certificates (PTCs), across its network of associated entities. PTCs are backed by underlying assets, with issuers expected to make interest payments to certificate holders. Typically, online investment platforms purchase these PTCs from companies and distribute them to clients.

On March 7, Care Ratings downgraded one such PTC, worth Rs 6 crore, to a ‘C’ rating—indicating a high likelihood of default.

In case of default, debenture holders would find themselves in the same position as institutional lenders such as the Power Finance Corporation (PFC) and the Indian Renewable Energy Development Agency (IREDA). Recovery may only be possible once these lenders are able to repossess the vehicles secured against the loans.

PFC and IREDA are reportedly exploring legal options to safeguard their loan exposure to Gensol Engineering.