BluSmart Mobility, a pioneering all-electric cab service provider, is facing a severe financial crisis that has left approximately 500 employees in uncertainty regarding their salary dues.
The company recently suspended its ride-hailing operations due to financial challenges.
It is struggling with cash flow issues, failed fundraising attempts, and increasing pressure from lenders.
This report delves into the challenges faced by BluSmart, the impact on its workforce, and the broader implications of its financial struggles.
BluSmart Salary Delays and Employee Concerns
BluSmart employees are still waiting for updates regarding their March salary payments. These payments were originally promised to be cleared by the end of April.
However, as of now, there has been no update from the management regarding the disbursement of salaries.
Employees have also raised concerns about the non-deposit of provident fund amounts for March with the Employees’ Provident Fund Organization (EPFO).
Many staff members have contacted the human resources department to request a timeline for their pay.
They are also seeking clarity on whether they will be compensated for April.
The uncertainty has prompted several employees to start looking for alternative job opportunities.
Senior executives, including CEO-Fleets Anirudh Arun, Chief Technology Officer Rishab Sood, and Chief Business Officer Tushar Garg, have already exited the company, further exacerbating the situation.
Suspension of Ride-Hailing Operations
On April 16, BluSmart suspended its ride-hailing operations, marking a significant shift in its business model.
The company revealed plans to transition into a fleet operator for its rival Uber.
This shift could result in layoffs for staff previously involved in its discontinued ride-hailing services.
Customers were informed about refund processing for balance amounts on the BluSmart app. These refunds would be completed within 90 days if services did not resume.
Financial Challenges and Fundraising Efforts
BluSmart’s financial woes stem from failed attempts to raise capital.
The company had launched a fundraising proposal last year, seeking $50 million from existing investors, but the plan did not materialize.
Discussions with private equity firm Eversource Capital for a slump sale are unlikely to move forward.
This follows regulatory actions against Gensol Engineering, a company promoted by BluSmart’s founders, Anmol Singh Jaggi and Puneet Singh Jaggi.
The Securities and Exchange Board of India (SEBI) has barred the founders from accessing capital markets due to alleged fund diversion.
Lenders to BluSmart are also increasing pressure for repayment, with bond investors reportedly planning to invoke the “Event of Default” provision to seek immediate repayment.
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