A forensic audit has been ordered to gauge the magnitude of the monetary misreporting. (File)
New Delhi:
Automobile after-sales service startup GoMechanic co-founder Amit Bhasin on Wednesday admitted to errors in monetary reporting, following which a forensic audit has been ordered and a enterprise restructuring undertaken which is able to see 70 per cent of the 1,000-odd workforce being laid off.
Nearly two years after it raised a mammoth $42 million in funding, it emerged that GoMechanic cooked its monetary books by inflating revenues.
In a publish on LinkedIn, Amit Bhasin mentioned founders acquired “carried away” of their quest for exploring alternatives to develop.
“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,” he wrote with out giving particulars of the misreporting.
A forensic audit has been ordered to gauge the magnitude of the monetary misreporting.
Besides the retrenchments, the startup has reportedly requested the remaining staff to work with out pay for the following three months.
“We take full responsibility for this current situation and unanimously have decided to restructure the business while we look for capital solutions,” Amit Bhasin wrote.
“This restructuring is going to be painful and we will, unfortunately, need to let go of approx. 70 per cent of the workforce. In addition, a third-party firm will be conducting an audit of the business.” Stating that whereas the scenario is way from something the founders might have ever imagined, GoMechanic is engaged on a plan which might be most viable beneath the circumstances.
Bhasin together with Kushal Karwa, Nitin Rana and Rishabh Karwa based GoMechanic in 2016 as an vehicle restore startup, connecting automotive house owners with restore service suppliers of their space. It additionally sells unique spare components and equipment for vehicles on its web site.
The startup is backed by marquee buyers together with Sequoia Capital, Tiger Global, Orios Venture Partners and Chiratae Ventures. In June 2021, it raised $42 million in Series C funding from Tiger Global, Sequoia Capital India, and others.
“The investors of GoMechanic were recently made aware by the company’s founders of the serious inaccuracies in the company’s financial reporting. We are deeply distressed by the fact that the founders knowingly misstated facts, including but not limited to inflation of revenue, which the founders have acknowledged,” a press release by main buyers mentioned.
The buyers, it mentioned, have collectively appointed a third-party agency to analyze the matter intimately.
“We will be working together to determine the next steps for the company,” it added.
With loans of Rs 120 crore and repayments of a few third due, the Gurugram-based startup should increase funds to outlive.
“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’,” Bhasin wrote within the weblog.
The effort was to facilitate a handy, reasonably priced, and dependable expertise which helped the corporate win the belief of consumers.
“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 lakh customers thus far,” he mentioned.
“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.” He went on to ask for the assist of well-wishers.
(Except for the headline, this story has not been edited by NDTV workers and is revealed from a syndicated feed.)
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