Distressed car services platform GoMechanic, whose founders admitted to financial irregularities in January, has been sold to a consortium led by Delhi-based auto components manufacturer Lifelong India Pvt Ltd.
Lifelong will be a majority shareholder in the consortium and the business will be run under car repair platform Servizzy, the companies said.
“Due to the recent financial difficulties at GoMechanic, the board and shareholders with support from Stride Ventures initiated a speedy and widely publicized sale process to ensure the continuity of business. The Servizzy consortium, to be led by the Lifelong Group, emerged as the strongest bid in this process for the acquisition of the GoMechanic Business in accordance with the terms and conditions contained in the agreement,” the media statement said.
Servizzy, according to its website, is an auto tech enabled premium car care service company which works with garages. It has 26 garages across 15 cities.
“Acquisition of the GoMechanic business, aligns with our strategic vision of synergising the Lifelong Group’s proven expertise in the automotive industry,” a spokesperson for Lifelong said.
Lifelong India Private Ltd was set up in May 1985 and diversified into auto component manufacturing in 1995, medical devices in 2005 and e-commerce in 2015, the company said.
The business has grown from an annual revenue of $ 0.5 million in 1995 to over $175 million today and caters to major customers in the automotive industry like Hero Moto Corp, General Motors, Arvin Meritor, and Stanley Black & Decker, according to company information.
Earlier in January, major investors at GoMechanic had said that a forensic inquiry was initiated following a statement issued by the company’s founders.
“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 the inflation of revenue, which the founders have acknowledged. All of this was kept from investors. The investors have jointly appointed a third-party firm to investigate the matter in detail, and we will be working together to determine the next steps,” major investors of the company said in a joint statement in January, after GoMechani cofounder Amit Bhasin published a statement admitting to financial irregularities.
The founders of GoMechanic admitted to falsifying figures to investors after SoftBank found irregularities in the five-year-old firm’s growth and revenue numbers while inspecting accounts before a potential investment. The firm also announced the dismissal of 70% of its staff, numbering between 1,100 and 1,200.
GoMechanic was backed by investors such as Sequoia Capital, Tiger Global Management, Orios Venture Partners, Brand Capital, Chiratae Ventures, and Elina Investments.
The company’s founders, Amit Bhasin, Kushal Karwa, Nitin Rana, and Rishabh Karwa, owned 25.5% of the company.
