BluSmart, a new Indian electric vehicle (EV) cab-hailing unicorn, is submerged in red ink. The company is currently facing over ₹2.5 billion (approximately $30 million) in outstanding dues. The company, which abruptly halted operations last month, is currently working on a plan to address its operational liabilities, including overdue payments to employees and other outstanding debts. Investors have emerged to help stabilize the government-focused business. As part of all this, they have pushed for a new investment of $30 million to turn around the troubled firm.
Today, BluSmart is on the brink of financial bankruptcy. According to a Reuters report, the company owes its thousands of employees between 500 to 600 million Indian rupees in back wages. This situation has left its workforce of 600 individuals without pay for several months, worsening morale and leading to widespread discontent. The loss of BluSmart’s suspension has hit BluSmart drivers especially hard. Many of them even organized a sit-down strike in New Delhi to air their grievances over the relapse into service suspension.
In addition to operational challenges, BluSmart has drawn the ire of regulatory agencies. The Indian corporate affairs ministry has opened an investigation into the company’s conduct. This poke on corporate governance issues is making its short trip to stabilize operations all the more difficult. Her inquiry has led to resignations from the Chair, CEO and President, and COO of the organization. This is true of co-founder Jaggi as well, who has provided an oral commitment to resign from BluSmart’s board. His resignation depends on guarantees that he will never be pursued again with legal action from capital markets investors.
With services suspended, 8,700 EVs from BluSmart’s fleet are being written off. This rolls alarm bells about the company’s sustainability going forward. Additionally, the Adani Group has shown interest in taking over BluSmart, possibly using its electric fleet to run on demand operations at multiple airports. This interest is a clear sign of the strong potential for a mutually beneficial, strategic partnership. If the acquisition goes through, it would provide a major boost to BluSmart’s business.
To further accelerate its recovery plan, BluSmart will introduce 1,000 EV cabs to its fleet. The company plans to reconnect with legacy drivers and lean on its internal networks to do so. Recent events indicate that Evera Cabs remains fiercely committed to addressing operational disruptions. They recently shared plans to deploy an additional 500 such cabs that they have leased from BluSmart’s lenders.
As BluSmart scales its operations, the proposed $30 million investment could help meet the company’s short-term financial commitments. It will most importantly go the further step of restoring confidence among their stakeholders. Time will tell if this capital infusion will prove sufficient. Of course, the early stage startup has a long way to go especially with hurdles such as gaining FTA approval.
Punit K. Goyal, BluSmart’s co-founder, has not responded to requests for comments regarding the current situation and the proposed funding. Regulatory agencies – both taxi and PUV regulatory bodies – are keeping a close eye on BluSmart’s operations. This unfortunate oversight further complicates their fight to get back to normal operations.
