GoMechanic’s Founder Admits To Error In Financial Reporting; Firm To Layoff 70% Workers

This admission by the co-founder in a post on LinkedIn revealed that the firm had errors in its finances as the firm followed the path of "growth at all costs."

GoMechanic was started in 2016 by Bhasin, Kushal Karwa, Nitin Rana, and Rishabh Karwa. On its website, it also offers original spare parts and car accessories. ( Image Source :Getty )

Co-founder of Automobile after-sales service startup GoMechanic, Amit Bhasin on Wednesday revealed that there was an error in the financial reporting of the company. He said that the firm has ordered a forensic audit and business restructuring which will see 70 per cent of the 1,000-odd workforce being laid off.

This admission by the co-founder in a post on LinkedIn revealed that the firm had errors in its finances as the firm followed the path of "growth at all costs." Bhasin said that the company founders got "carried away" in their quest for exploring opportunities to grow.

"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

This comes nearly two years after the firm raised $42 million in funding. A forensic audit has been ordered to gauge the magnitude of the financial misreporting.

The startup has also asked the remaining employees to work without pay for the next three months, according to a PTI report. 

"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 per cent of the workforce. In addition, a third-party firm will be conducting an audit of the business," Bhasin wrote. 

"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 statement by major investors reported PTI. 

"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 in the blog.

"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 said.

GoMechanic’s investors including Sequoia Capital, Tiger Global, Orios Venture Partners, and Chiratae Ventures support the startup. It received $42 million in Series C fundraising in June 2021 from investors including Tiger Global, Sequoia Capital India, and others.

GoMechanic is a business that connects car owners with local auto repair shops. It was started in 2016 by Bhasin, Kushal Karwa, Nitin Rana, and Rishabh Karwa. On its website, it also offers original spare parts and car accessories.