Six-year-old automobile after-sales service startup GoMechanic is set to fire 70% of its workforce, becoming the latest company to issue pink slips to its employees.
This comes after SoftBank allegedly pulled out from infusing capital in the startup after due diligence (DD) shed light on glaring loopholes in the company’s accounts and operations.
The investment DD was being conducted by EY India, which flagged issues like fictitious garages, selective payments to certain garage units and overall inflated revenue and user metrics in the company.
Now facing capital issues, GoMechanic has decided to sack employees with co-founder Amit Bhasin taking the blame upon himself. He acknowledged that the company made errors in judgment as they followed growth at all costs, including in regard to financial reporting. Bhasin stated, “We take full responsibility for this current situation and unanimously have decided to restructure the business while we look for capital solutions.”
In addition to this, a third-party firm will be conducting an audit of the business.
The company, which was founded in 2016 for people looking for a better car repair experience and served as many as 7 lakh customers, will say goodbye to 70% of its workforce. However, Bhasin said that they are working on a plan which would be most viable under the circumstances. GoMechanic has a presence in over 30 cities with over 600 garages.