Gensol & Blu-Smart: A Tale of Debt and Distress

Gensol's balance sheet has been used to build Blu-Smart's business.

- Varun Sood

On 16 January, Refex Industries Ltd, a manufacturer of refrigerant gases, informed the stock exchanges that its wholly-owned subsidiary, Refex Green Mobility, had agreed to buy 2,997 electric cars from Gensol Engineering Ltd. Refex Green Mobility would take over Gensol's existing loan of ₹315 crore as part of this transaction.

Gensol Engineering Ltd also informed the same to the exchanges. Shares of Refex ended 1.6% higher the next day, while shares of Gensol remained unchanged.

This transaction came under the spotlight after Gensol, a solar engineering, procurement and electric vehicle (EV) financing company, saw two rating agencies downgrade its borrowing to default earlier this month. Rating agency Icra even said Gensol is falsifying statements.

Gensol denies any wrongdoing and claims that this sale should help reduce its debt, from ₹1,146 crore to ₹831 crore.

So, why is there a problem?

Many unanswered questions linger, particularly around the company's ties with the privately held Blu-Smart Mobility Ltd, the electric cab-hailing service. Blu-Smart was co-founded by Anmol Singh Jaggi; the 39-year-old is also the chairman and managing director of Gensol.

In Gensol's EV financing business, the company buys cars and then leases them to other companies. Gensol acknowledges that it owns 2,997 EVs that are part of Blu-Smart's fleet. But that's not the complete story—Blu-Smart's fleet consists of 8,000 cars and Gensol, according to people Mint spoke to, owns a hefty share of this number.

While Gensol didn't disclose the overall number of cars it owns, and the number it leased to Blu-Smart, a spokesperson for Blu-Smart stated that multiple lessors lease out vehicles to the ride-hailing company.