Blu Smart repays after ‘default'. Now it has to convince bondholders

The Gurugram-based company paid the holders of non-convertible debentures (NCD) over the weekend, said the people cited above on condition of anonymity. However, the initial delay caused the trustee of the NCDs to trigger a “cross-default" and call a meeting on 17 March. A cross-default puts a borrower in default on all obligations if it fails to repay one on time.

The NCD payment of ₹30 crore at a coupon rate of 12% was initially due on 3 February, one of the people cited above said. The company repaid around ₹18 crore by Friday, 21 February, and the rest of the pending amount on Saturday.

Co-founder Puneet Goyal, in an emailed reply to Mint late on 24 February, said the company had repaid ₹10 crore to 160 bondholders on 3 February and the remaining ₹20 crore between 4 and 22 February. 

"As of today, every single bondholder has been paid, along with interest," Goyal said in his reply after the original article was published earlier in the day.

Also read | BluSmart set to launch EV-cab service in Mumbai, opens ‘invite-only’ exclusive registrations

Default trigger

Founded by Anmol Jaggi, Puneet Jaggi and Goyal in 2019, BluSmart offers an EV cab-hailing and charging service predominantly in Delhi and Bengaluru. In January, it extended its services to Mumbai on the city’s airport route. Anmol Jaggi is also the promoter of Gensol Engineering and Matrix Gas.

“It was a capital crunch and a lumpy payment schedule which caused the delay [in repayment]," the first person cited above said. The company typically has an outstanding NCD repayment of around ₹150-160 crore annually, but half of these payments were due over December and January. This caused a temporary cash crunch.

“The next repayment for an NCD is only in November 2025," the person added, stressing that the company expected a smoother repayment schedule in future.

Unlike a bank loan repayment, where a commercial bank guarantees a 90-day grace period, even a day’s delay in a bond repayment triggers a default.

Also read | Low battery: The biggest challenge hindering BluSmart, the electric-cab company

Avoiding a cross-default

As the company was gathering the capital to repay debenture holders, Catalyst Trusteeship Ltd, the trustee of the bond, issued an emailed notice to debenture holders.

“As per the relevant clause in the DTDs (debenture trust deed), failure in payment of the principal amount has triggered a cross-default clause under your ISIN. Hence a meeting of debenture holders is being convened to seek instructions mainly to consider event of default and determine the appropriate course of action," according to the email sent the trustee, which proposed a meeting on 17 March of the debenture holders.

BluSmart now plans to persuade bondholders to avoid declaring a cross-default, the person cited above said.

“Before this, BluSmart has repaid 19 NCDs on time. In the meeting, the company will propose to the bondholders that a cross-default should not be triggered as the repayments have been made," the first person cited above added.

Ajay M. Khatlawala, managing partner at law firm Little & Co., said, “Practically, a cross-default should not be triggered now, as the debt has been discharged though it depends on the terms of the deed."

BluSmart's fundraise

BluSmart is also in the midst of a fundraise worth ₹400 crore. Of this, it has raised ₹110 crore from a clutch of family offices and high-net-worth individuals in December, and has lined up equity committments for another ₹150 crore. The company expects to raise the balance amount over the next few months, which will help it tide over future capital requirements for its expansion plan, the people cited above added.

Goyal in his email reply to Mint said “BluSmart is currently raising $50 million in its Series B equity round, and has sufficient capital for long term growth".

He added that the company was "on track to close FY25 with ₹675 crore GMV (vs ₹376 crore in FY24), representing an 80% YoY growth. In the first nine months of FY25, GMV has grown 74%, with improving gross margins and reduced EBITDA burn".

GMV, or gross merchandise value, is a proxy for gross sales before taking into account discounts and other factors.

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Debt paid

On Sunday, BluSmart said in a statement that its outstanding debt against the NCDs has been paid. 

“With this repayment, the outstanding debt amount of BluSmart reduces significantly and is at the lowest level since the beginning of 2023. We are confident in our growth trajectory and will continue to build a strong brand supported by strategic expansion, increasing focus on premium offering, and expanding our user base," the spokesperson said.

BluSmart had revenue of ₹360 crore in fiscal year 2024 (FY24), a jump from ₹160 crore in FY23, according to a report by news website The Arc. It had a negative Ebitda margin of 90% in FY24, the report added. Ebitda is short for earnings before interest, taxes, depreciation and amortization. Ebitda margin is a measure of a company’s profitability.

BluSmart’s investors include BP Ventures, the family office of Deepika Padukone, the MS Dhoni family office, ReNew Power chief executive officer Sumant Sinha and responsAbility Investments, a Switzerland-based asset management company.

 

This article was updated to include BluSmart co-founder Puneet Goyal's response that was emailed after the article was published.