State-run lenders for Gensol’s cars dither on what next

Gensol Engineering Ltd had borrowed from Power Finance Corp. Ltd (PFC) and Indian Renewable Energy Development Agency (Ireda) to buy 4,700 electric cars, which were then leased to BluSmart. These cars have been idling since the regulatory strictures on Anmol Singh Jaggi, who led both companies. Cars lose value, electric cars more so, and idling ones may see batteries degrade even faster.

“Many big banks, asset financing firms and family offices of high net worth individuals are in the market to sell or lease the BluSmart vehicles they financed,” a person aware of the matter said. “PFC and Ireda have still not decided what they will do with cabs hypothecated with them.” A second person confirmed that the state-run firms are yet to decide on how to proceed.

On Monday, Delhi-based Evera Cabs took over 500 BluSmart cabs from lenders, with plans to take 500 more. Banks, non-bank lenders and family offices who financed such purchases are also looking for parties who can buy or lease them.

Also read | BluSmart investors look to buy promoters’ stake, revive the ride-hailing company

A BluSmart investor presentation in 2023 said its fleet had 2,000 EVs leased from various lenders. The person cited above said these lenders include Axis Bank, HDFC Bank, Mahindra Finance’s Quiklyz, Tata Motors Finance and Kotak Mahindra Bank.

“We have exposure to Gensol. We are actively assessing the developments pertaining to Gensol and adopting all measures to preserve and protect banks interest following due process of law,” an HDFC Bank spokesperson said.

Queries emailed to PFC, Ireda, banks and financial institutions remained unanswered.

Over 25 family offices, green financing institutions and transport offices had joined Assure, BluSmart’s asset financing programme. Under the programme, they bought at least 10 cars at an average price of ₹13.5 lakh and leased them to BluSmart, in return for monthly rent. In December, BluSmart announced that the programme hit ₹100 crore.

Given the average price of cars, there could be 700-800 cabs which were bought through this programme by family offices and other financing institutions.

Read this | Uber’s lifeline off the table for BluSmart as EV depreciation becomes key contention

Typically in a lease arrangement, those providing the financing, known as lessors, have the right to repossess the vehicle if the company misses payments.

“Private lenders are rushing as the depreciation of EVs is higher. As this is a distress sale, the valuation of the cars in the fleet is also being discounted further,” the person cited above said.

A third person aware of the matter said lessors are reaching out to EV fleet operators on their own.

In January, Gensol had agreed to sell 2,997 BluSmart EVs to Chennai-based Refex group at an average of ₹10.5 lakh per unit. As per the first person, the value of BluSmart cars in the market are now lower. To make it worse, Refex has decided not to proceed with the purchase.

“Private lenders act swiftly to contain losses, often preferring a timely haircut over prolonged recovery uncertainty,” said Srinath Sridharan, independent director and corporate advisor. “In contrast, state-backed lenders move cautiously due to internal compliance and process constraints. The challenge for all lenders is the limited pool of EV fleet operators and the rapid depreciation of these vehicles—making the urgency of some players more understandable.”

And this | CCPA cracks the whip on BluSmart to ensure wallet refunds

Credit rating agencies Care Ratings and Icra had downgraded the debt raised by Gensol to ‘default’ in March. After the Securities and Exchange Board of India (Sebi) passed an interim order against Gensol and its promoters, PFC and Ireda filed complaints with Delhi Police’s Economic Offence Wing (EoW) in April.

BluSmart followed an asset-light model, wherein it did not own any of those vehicles and instead leased them from partners.

While Mint could not independently ascertain the composition of its fleet, there are some estimates which can be put together using public disclosures.

Its fleet comprised approximately 8,700 vehicles. About 4,700 vehicles came from Gensol who bought them using loans of ₹663 crore from PFC and Ireda. As per its disclosures, close to 2,000 cabs came from tie-ups with financial institutions like banks and other institutional asset financing firms.

It also worked with financing firms like Orix, Clime Finance, SMAS Auto Leasing India and Shefasteq OPC who have since sued the company. Put together, these firms had leased close to 500 vehicles to the company and have now secured orders from the Delhi High Court that BluSmart and Gensol cannot create third party rights over EVs leased to them.

And read | Gensol promoters lose over half of their ownership