In a major jolt to India’s electric mobility ambitions, public sector lenders Power Finance Corporation (PFC) and Indian Renewable Energy Development Agency (IREDA) are reportedly preparing to auction over 5,000 electric vehicles (EVs) leased to troubled ride-hailing startup BluSmart, due to fears of loan default by Gensol Engineering — the firm that owns and financed the EV fleet. The news marks a critical juncture for the EV ecosystem, exposing vulnerabilities in financing and operational models when key players falter.
Credits: MSN
EVs on the Auction Block
According to a report by The Economic Times, over 5,000 EVs financed through loans worth ₹663 crore by PFC and IREDA are at the centre of the crisis. These vehicles were leased by Gensol Engineering to BluSmart, an electric-only ride-hailing platform. However, after BluSmart suspended its operations on April 17, lease payments came to an abrupt halt.
With no fresh inflows to cover the loan obligations, lenders are reportedly scouting for potential buyers of the hypothecated vehicles. This move, while drastic, is being seen as a preventive measure to avoid a complete erosion of value in case the Gensol loan account is tagged as a non-performing asset (NPA).
A Ticking Debt Bomb
So far, both PFC and IREDA have not classified the loan account as an NPA, mainly relying on a debt-service reserve account maintained by Gensol to cover payment shortfalls. But this buffer is depleting fast, and in the absence of incoming lease revenues, sources believe it’s only a matter of time before the account slips into default.
This concern was compounded when credit rating agencies downgraded Gensol’s debt to ‘D’ (default status) earlier in March due to delayed repayments.
The Gensol–BluSmart Tangle
At the heart of the issue is the complex relationship between Gensol and BluSmart. Both companies are promoted by brothers Anmol Singh Jaggi and Puneet Singh Jaggi, who now find themselves under the regulatory scanner. The Securities and Exchange Board of India (SEBI) has barred them from capital markets over allegations of fund diversion and insider trading involving Gensol shares.
SEBI has given the Jaggi brothers 21 days to respond to the charges, but the damage to investor and lender confidence is already evident. The regulatory overhang further complicates debt recovery, especially given the interconnected operations of the two companies.
Promoters on Thin Ice
Stock exchange data paints a worrying picture for Gensol. The Jaggi brothers reportedly hold 62.65% of the company, but a staggering 81.6% of their stake — around 19.5 million shares — is pledged. In the event of loan default or share price decline, this could trigger a cascade of forced sales, intensifying the company’s financial distress.
What This Means for India’s EV Push
The situation raises red flags for India’s rapidly growing EV sector, particularly around fleet-based financing and leasing models. BluSmart had long been seen as a poster child for India’s electric mobility transition, operating a 100% EV fleet and drawing marquee investors and policy goodwill.
However, this crisis highlights how capital-intensive and operationally brittle such ventures can be, especially when reliant on complex financial structures and interdependent promoters.
Credits: Mint
The Road Ahead
With BluSmart’s operations halted, Gensol’s debt in distress, and the promoters facing SEBI heat, the outlook is grim. If PFC and IREDA go through with the auction, it could be one of the largest repossessions of EVs in India’s history — a cautionary tale for future green finance models.
Neither Gensol, BluSmart, nor the lenders have responded to media queries so far, and Moneycontrol has not independently verified the report.
For now, all eyes are on whether Gensol can manage a turnaround — or if the silent EVs in its fleet will soon have new owners under the gavel.
