How BluSmart’s Founders Diverted EV Loans Into Luxury: What Startups Must Learn Word Count: ~1100 words

💸 How India’s EV Poster Boy BluSmart Crashed into a 1000-Crore Loan Scam

In a shocking twist to India’s green mobility dream, BluSmart—once celebrated as the future of electric taxis in metros—has now gone bankrupt. But it’s not just a case of startup failure. It’s a full-blown finance scandal, with the founders allegedly blowing up over ₹300 crore meant for EVs on their own luxury lifestyle.

From buying a ₹50 crore apartment in DLF Camellias to shopping for ₹26 lakh golf sets, this case is turning out to be one of India’s most high-profile misuse-of-funds stories.

Let’s break down how it happened, how they covered it up, and what every startup and investor must learn from this mess.

1️⃣ Where Did the Money Come From?

BluSmart was backed by Gensol Engineering Ltd, a listed company. Over time, they raised ~₹978 crore from heavyweight public lenders like:

• IREDA (Indian Renewable Energy Development Agency)

• PFC (Power Finance Corporation)

The money was sanctioned to purchase 6,400 electric taxis to expand BluSmart’s EV fleet.

But only 4,704 EVs were actually bought. The cost of those cars came to around ₹568 crore.

So what happened to the remaining ₹262 crore+?

2️⃣ The Diversion Game: Where the Funds Really Went

Here’s a look at the alleged fund diversion:

• 🏢 ₹43–50 crore: Luxury apartments in DLF Camellias, bought through a shell firm Cab Ventures LLP where both founders were partners.

• 🏌️ ₹26 lakh: High-end golf set (TaylorMade).

• 💍 ₹18 lakh: Designer watches and sunglasses from Titan.

• 💳 ₹6.2 crore: Transferred to mother’s account (Jasminder Kaur).

• 👜 ₹3 crore: Sent to wife’s account (Mukda Kaur Jaggi).

• ✈️ ₹7+ lakh: Spent on MakeMyTrip for personal foreign holidays.

• 💶 ₹2 crore: Used to buy foreign currencies.

• 🧾 ₹12 lakh: Annual maintenance fees for the Camellias flats.

All of this was done via shell companies, false documentation, and multiple layers of circular payments.

3️⃣ How They Hid It: Classic Corporate Cover-Up Moves

The SEBI interim report reveals some clever (but illegal) financial engineering:

• Fake documents were sent to rating agencies (ICRA, CARE) to avoid credit downgrades.

• Internal records claimed the EVs were delivered and deployed—but physical checks said otherwise.

• Gensol used intermediary firms like Capabridge Ventures LLP to launder funds—then used these to pay for personal luxuries.

It wasn’t a loophole. It was a well-planned system.

4️⃣ What They Should Have Done Instead

Startups are allowed to make mistakes—but this wasn’t one. It was wilful mismanagement. Here’s what ethical founders would’ve done:

✅ Use funds strictly for stated purpose
Every rupee should have gone into EV procurement—not flats or Rolex watches.

✅ Maintain clean separation between company and personal accounts
No LLPs. No relatives as fund recipients. No shell transfers.

✅ Get independent directors with veto power
A strong, independent board could’ve blocked shady transactions early on.

✅ Conduct regular external audits
Third-party audits would’ve raised red flags in the first six months.

✅ File accurate reports to regulators
You can’t fudge loan usage with IREDA or PFC. It always catches up.

5️⃣ What’s Happening Now: Fallout & Next Steps

As of June 2025:

• SEBI has barred the Jaggi brothers from any directorship in listed firms.

• Delhi High Court ordered 129 EVs to be seized and moved to a court-appointed administrator.

• ED (Enforcement Directorate) raided multiple BluSmart and Gensol offices.

• Independent directors of Gensol resigned en masse.

• Lenders like IREDA and PFC may take legal action to recover public money.

• 🚦Lessons for Entrepreneurs, Investors & Regulators

  This case is a wake-up call. Here’s what it teaches:

  1. For Startups: Transparency isn't optional. Corporate governance is not just for IPO stage.

  2. For Investors: Due diligence can’t stop after the term sheet. Track fund usage quarterly.

  3. For Regulators: A startup being “eco-friendly” isn’t enough—money trails matter more.

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