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Car workshop and auto spare parts platform, GoMechanic is going to let go of approximately 70% of its workforce. This was announced by co-founder Amit Bhasin in a long LinkedIn post. GoMechanic, which offers everything from mechanics to carwashing services on an app, bills itself as having India’s largest auto service center network. With its funding round in jeopardy, the startup is now facing a cash crunch, the people said.
“We made grave errors in judgment as we followed growth at all costs, particularly in regard to financial reporting, which we deeply regret,” Bhasin said in a LinkedIn post on Wednesday, without sharing details. “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 approximately 70% of the workforce. In addition, a third party firm will be conducting an audit of the business.”
GoMechanic, the Gurugram-based company was founded in 2016 by four friends including Kushal Karwa and Amit Bhasin.
Full text by Amit Bhasin
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.
Meanwhile, Bloomberg reported that EY’s 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 people said, asking not to be identified discussing sensitive information. The investor group that hired EY pulled out of talks to invest in GoMechanic and informed Sequoia about the lapses, the people said.
Spokespersons for EY, GoMechanic and Sequoia didn’t respond to emails, phone calls and text messages from Bloomberg News seeking comment.
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