GoMechanic co-founder Amit Bhasin announced that the company will lay off approximately 70 per cent of its workforce amid allegations of inflated revenue. He admitted to financial reporting errors at the Sequoia-backed car repair startup and also said that the cash-strapped company will also get its accounts audited by a third party.
He said that they also took “full responsibility” of the current situation and said that they will now restructure the business while looking for capital solutions, in a LinkedIn post.
Read his full post here:
“We founded GoMechanic in 2016 to bridge the gap between process-oriented authorized service centers and cost-effective local workshops for people who were looking for a better car repair experience. In a short span of time, we were able to create a startup that provided a 'network of technology-enabled car service centers, offering its services at the convenience of just a tap.’ It was our conscious commitment to facilitate a convenient, affordable, and reliable experience that helped us win the trust and hearts of our customers. We were fortunate to get support from a large number of investors in this journey. We came a long way, from starting out with a few hundred customers to expanding our business exponentially to serving more than 7 Lac customers thus far.
As entrepreneurs, we identify problems, come up with solutions, and explore every opportunity to grow those solutions to meet unmet needs. But in this instance, we got carried away. Our passion to survive the intrinsic challenges of this sector, and manage capital, took the better of us and we made errors in judgment as we followed growth at all costs, including in regard to financial reporting, which we deeply regret.
We take full responsibility for this current situation and unanimously have decided to restructure the business while we look for capital solutions. This restructuring is going to be painful and we will unfortunately need to let go of approx. 70 percent of the workforce. In addition, a third party firm will be conducting an audit of the business.
While the situation is far from anything we could have ever imagined for Go Mechanic, we are working on a plan which would be most viable under the circumstances.
Need the support of our well wishers more than ever.”
Due diligence conducted by EY for prospective GoMechanic investors in its research alleged that about 60 of the more than 1,000 GoMechanic service centers may have violated accounting norms to overstate revenue and divert funds. The investor group that hired EY pulled out of talks to invest in GoMechanic and reportedly informed Sequoia about the lapses.
The Gurugram-based company was founded in 2016 by four friends including Bhasin.
GoMechanic, which offers everything from mechanics to car-washing services on an app, has previously billed itself as having India’s largest auto service centre network.
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