Good morning. US vice-president JD Vance, who is on a four-day trip in India, met Prime Minister Narendra Modi in Delhi yesterday. They “welcomed the significant progress” in the negotiations for the India-US bilateral trade agreement, but did not share any specific details.
In today’s newsletter, we look at why Indian retail investors are hitting pause on their monthly investments. But first, the future seems bleak for BluSmart, with its owners barred from the markets and accused of corporate wrongdoings.
I had a great break eating my way through Thailand, but by Friday I was suffering from a deep sense of fear that IBB readers will want more of Robin. It’s good to be back and thank you, Robin.
Journey’s end?
Ten days ago, I had a harrowing ride to the airport in a BluSmart cab and almost missed my flight. By the time I returned from holiday, the electric taxi company had collapsed. How did a promising Indian start-up that once gave Uber a run for its money go belly-up so suddenly?
BluSmart’s goose was cooked on Thursday when the Securities and Exchange Board of India (Sebi) released its interim report on Gensol, the listed renewables company. Both companies were founded by Anmol Singh Jaggi and Puneet Singh Jaggi. The markets regulator claimed the Jaggi brothers had used a part of loans worth Rs9.78bn ($114.8mn) meant for growing BluSmart’s fleet to buy multimillion dollar homes and other personal luxuries instead. The brothers were barred from the securities market, and Gensol shares crashed. With no way to raise money to pay drivers or run its business, BluSmart’s operations too came to a halt.
While local headlines have pounced on Sebi’s account of a $5mn apartment, Rs2.6mn golf set and Rs1mn spa spend (I will confess I am curious about how one can spend this much money in a spa), the regulator’s claims about the brothers’ business operations are no less jaw-dropping. The brothers created an intricate web of companies, Sebi alleged, funnelling money from one to the next and using public money from the listed company to invest in privately held entities. Regulators also said the duo used company credit cards to pay for personal expenses, and even forged documents they submitted to credit rating agencies.
The Jaggi brothers “strongly disagree” with the findings in Sebi’s interim order and plan to challenge it. “The conclusions drawn are premature, and we believe they are based on a misinterpretation of facts and documents,” Anmol Singh Jaggi wrote to me.
If Sebi’s claims bear out, questions should also be raised about the apparent failure of checks and balances in a publicly held company. The regulator’s investigation was launched only after it received a complaint alleging possible manipulation of the company’s share price. But why were no red flags raised by the auditors and independent directors over all these years?
Gensol and BluSmart’s troubles aside, building a complicated network of interconnected companies in order to hide funds and transactions is not an uncommon practice in India’s corporate sector. Investors often go in blind, placing faith on the reputation of the founders. It is the job of auditors and independent directors to look out for their interests, but that system is far from foolproof.
Corporate wrongdoing is rarely punished in India, and once the initial flurry is over and the story falls from the headlines, it is often forgotten. In past instances, the promoters have fled the country, often to glitzier lives abroad, while lenders, investors and employees are left to pay the price. It is imperative that the market and corporate regulators step in to fix the loopholes in the system, holding founders, auditors and directors to account.
Do you think Gensol’s case will shake investor confidence in India? Hit reply or write to us at indiabrief@ft.com
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SIPs slip
Spooked by the downward turn in markets, Indian retail investors are increasingly suspending their monthly investments in mutual funds. In January, suspended systematic investment plans (SIPs) with such funds exceeded new SIPs for the first time since 2019, when data became publicly available. The numbers worsened in March, with 5.2mn suspended plans to 4mn new ones.
The overarching story in the past five years in Indian equity markets has been about retail participation, with more Indians switching from traditional savings products such as bank fixed deposits to equity investments. A large part of this is thanks to SIPs, which allow investors to divert a part of their income every month into investments. Funds invested through this route have quadrupled since 2019, boosted by rising markets and higher returns. Barring the Covid-19 dip, a large chunk of these new equity enthusiasts had not seen negative returns in the market.
But that is now changing. Since September 2024, Indian equities have been trending downwards. Portfolio returns were, at first, muted and have been in freefall ever since Trump began his tariff theatre. Investors, alarmed by the consistent red in monthly statements, have begun to hit pause, choosing not to throw good money after bad.
While the trend will reverse if markets improve, at a fundamental level, this is a good opportunity for the stock market regulator, Sebi, and the mutual fund association to educate investors. Sebi has been struggling in the past few years to protect retail money from the perils of the market, especially the futures and options segment, and is considering conducting a qualifying test before allowing individuals to trade in these. Similarly, conducting basic training and testing for equity investments through SIPs will also go a long way. Retail investment in the stock market is win-win; it increases the depth of the market and is a sign of a maturing industry. But for investors, doing it with their eyes wide open would be even better.
Are you continuing with your SIPs? Hit reply or write to us at indiabrief@ft.com
Go figure
India’s gold imports soared in FY24-25, as trade tensions and other global factors had investors fleeing to safe haven assets.
8%
Gold’s share of imports
My mantra
“Discipline sharpens focus, and focus drives better results. By eliminating distractions, discipline allows me to channel my energy into meaningful work. True productivity comes from working with intention and consistency.”
Lalit Ahuja, founder, ANSR
Each week, we invite a successful business leader to tell us their mantra for work and life. Want to know what your boss is thinking? Nominate them by replying to indiabrief@ft.com
Quick question
Jamie Dimon wants to kill meetings. I am curious to know how many meetings you have in an average week. Take part in our poll, here.
Buzzer round
On Friday we asked, what did astronomers recently claim to have found on a water-covered planet 124 light years from Earth?
The answer is . . . signs of biological activity, in particular certain organic molecules, that scientists have called the strongest evidence yet of extraterrestrial life. K2-18b’s oceans could be “teeming with life”. (OMG!)
Yaman Singhania was first with the correct (and rather specific) answer. Ram Teja and Prasanna Venkatesh came second and third, respectively. Congratulations!
Thank you for reading. India Business Briefing is edited by Tee Zhuo. Please send feedback, suggestions (and gossip) to indiabrief@ft.com.