A group of investors are considering plans to inject an additional $30 million into Blusmart last month to bring back Indian taxi startups. There is a catch on offer from these existing investors. This is subject to Blusmart co-founder Anmol Singh Jaggi agreeing to resign.
The proposed investment will be treated in the form of unsecured obligations and is intended to correct startup management liabilities, including pending fees and employee salaries, two sources told TechCrunch.
BLUSMART investors began discussing the resolution last week by investors with Prota rights, including BP Ventures and Switzerland-based reactivity. BP Ventures and Responsibility reduced comments when contacted Monday.
Jaggi has not signed his resignation from Blusmart, but sources have told TechCrunch that he has verbally agreed to resign from the board of directors, subject to assurances that he will not face future legal action from Blusmart investors.
Jaggi and other co-founder of Blusmart, Punit K. Goyal, did not respond to a message sent earlier this week.
Blusmart halted the business last month after the probe was launched by a company that shares Gensol Engineering, its major EV Lesser and Jaggi as its co-founder. The move has affected EVs who didn’t receive their salary until at least March, their investors and riders looking for 600 employees.
The Gurugram-based startup had pending membership fees of around 2.5 billion Indian rupees (approximately $30 million).
Approximately 8,700 EVs from Blusmart’s fleet have also been abandoned due to its service halt. This can affect the health of the vehicle’s batteries and other components if the startup does not restart services immediately.
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This outage also affected Blusmart drivers. Some of them are on strike in New Delhi to protest the move. Some of these out-of-work drivers may see some relief as Delhi-based EV cab hailing service Evera Cabs recently announced the addition of 500 taxis that Blusmart Lenders leased to it. The startup is also considering adding 1,000 EV cabs currently associated with Blusmart and some of its drivers.
Existing Blusmart investors don’t want startups to lose branding by allowing other cabhailling companies, including Evera and Uber, to use their fleet in services.
Sources told TechCrunch that investors hope to resume services in the next three weeks. Still, there are some challenges to Blusmart’s comeback. One of these is that it is considered a corporate governance issue, in addition to the issue of Gensol, which indirectly affects startups. The Indian Ministry of Corporate Affairs recently launched an investigation into Jensol and Brasmart for this.
Jaggi’s resignation from Blusmart is not as certain as it appears. Indian stock exchange regulators have ordered Jagi and his brother to resign from Jensol, who is publicly listed while firing the probe. However, regulatory instructions do not apply to Blusmart, a private entity.
BP-backed by UK BP, Climate Investment Fund Eversource Capital shared its interest in purchasing Blusmart at last month’s slump sale, as first reported by Indian outlet Inc42. The fund proposed to integrate the startup with B2B fleet operator Lithium Urban. However, the Blusmart board has not agreed to the offer as it sets the startup price at a 60% cut from its previous $300 million valuation.
Lithium Urban is struggling as a company increasing losses, with most of its vehicles reaching the end of the day, TechCrunch learned last month. Sanjay Krishnan, the former founder of Lithium Urban, also abandoned the business, said someone familiar with the matter. Eversource Capital and Lithium Urban did not respond to requests for comment at the time.
Indian conglomerate Adani Group has also expressed interest in purchasing an EV Cab-Hailing startup to use the fleet at the airport, TechCrunch learned last month. The company had early discussions with the Blusmart Board of Directors. He already has Uber as a partner in the fleet.
Adani Group did not respond to requests for comment.
Nevertheless, Blusmart investors hope that the startup will be better positioned once it resumes its operations to attract investments from strategic like Eversource Capital, Uber and Adani.
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