Talks had started as part of BluSmart’s plan to revive operations of its cabs. BluSmart was supposed to act as a fleet partner for Uber.
“Uber has now withdrawn its interest,” one of the people cited above said on the condition of anonymity. “Its main concern was the depreciation of cars in the BluSmart fleet. The price being asked for the transition did not meet its valuation.”
This is the second setback for the embattled Anmol Jaggi-founded BluSmart in as many months. Last month, a ₹315-crore transaction to sell 2,997 cars to Chennai-based Refex Group, at a value of ₹10.5 lakh per car, was cancelled.
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According to the person mentioned above, an early assessment of BluSmart’s fleet was done by Uber’s team after the talks started in March. A key concern was that electric vehicles (EVs) have high depreciation, which was not accounted for in the price being asked by BluSmart, the person cited above said. Mint could not independently verify the price being asked by BluSmart.
Earlier, Mint reported based on data from used car marketplace players such as Cars24 and Spinny that EVs lose value quicker than traditional fuel vehicles. According to Cars24, popular ICE (internal combustion engine) models can retain 50% of their value in three to five years, unlike EVs. Spinny’s observations suggested that old EV models can have price gaps as high as 6% with old ICE models.
Another concern that emerged during the talks was the fact that a large share of Gensol-owned Blusmart fleet of about 5,000 cars was hypothecated with lenders Power Finance Corporation (PFC) and Indian Renewable Energy Development Agency (Ireda).
Gensol had taken loans of more than ₹663 crore from these lenders to buy the cars, which were then-leased to BluSmart.
“There were doubts over whether the cars can be sub-leased to Uber. The company was advised to not take the risk as there is some regulatory overhang,” the person cited above said.
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Queries emailed on Friday to Uber and BluSmart remained unanswered till press time.
“There must be concerns among potential buyers about what value they will get from a deal with BluSmart,” said Shriram Subramanian, founder and managing director of InGovern Research Services, a proxy advisory firm. “There is considerable liability linked with the cars and questions over the value as well.”
Subramanian added that buyers are aware that this is a distress sale, so they will negotiate hard on the price.
To be sure, Blusmart followed an asset-light business model in which it did not directly own its cab fleet. Instead, it took cars from leasing partners.
About 5,000 of its more than 8,000-vehicle fleet came from Gensol while it also worked with some partners such as Japanese financial services firm Orix and Clime Finance.
BluSmart’s board of directors has co-founder Anmol Singh Jaggi; Sophia Nadur, bp Venture managing director for Asia and Middle East; Inderpreet Wadhwa, former chief executive officer of Azure Power; and Dharmichand Sunil Kumar, who is registered as director in nearly two dozen companies.
And this | Gensol fast-charged Blu-Smart. But their ties are a governance puzzle
Reportedly, some visuals had appeared in April where BluSmart cars were being rebranded to Uber Green. According to a second person aware of the developments, those cars were not owned by Gensol but another fleet partner of BluSmart, which could have struck a deal with Uber.
The fast turn of events since the downgrade of Gensol Engineering’s credit to default in March by rating agency Icra has made things difficult for BluSmart. Following Sebi’s interim order against Gensol and its promoters Anmol Singh Jaggi and Puneet Singh Jaggi, PFC and Ireda have also filed complaints against the company with the Economic Offences Wing (EoW) of the Delhi Police.
As per a PTI report, the Enforcement Directorate has raided Gensol and detained promoter Puneet Singh Jaggi. His brother is said to be in Dubai currently.
Meanwhile, there have been reports of BluSmart being in talks with climate-focused funds such as Eversource Capital for a slump sale, which has not materialised yet.
Since the start of the year, Gensol Engineering’s share price has lost over 90% value as against a 2% rise in Nifty.
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