BENGALURU: India’s largest car repair startup GoMechanic was acquired today by a consortium led by car parts manufacturer Lifelong Group ending months of uncertainty. The acquisition will help the 38-year-old company expand its operations in the automotive service and repair sector, it said in a statement.
It said Lifelong Group would become the majority shareholder under Gurugram-based car care startup Servizzy. It added that the deal is expected to strengthen its presence in the automotive service and repair sector and align with its strategic vision.
The deal will enable the preservation of the ecosystem at large and provide a livelihood to employees, Lifelong Group said in a statement.
A consortium of Lifelong Group, a 38-year-old auto components maker, will acquire GoMechanic’s service and spare parts business for around INR 300 crore (US$46 million), the company said in a statement. It added that the acquisition would further strengthen its automotive component business and cater to major players such as Hero Moto Corp, General Motors, Arvin Meritor, and Stanley Black & Decker.
Founded in 2016, GoMechanic was backed by Sequoia Capital India, known for its investment in payment services BharatPe, Zilingo, and Trello. The company operates a network of over 1,000 garages across India. It has serviced about 700,000 customers so far.
GoMechanic was a ‘game changer’ in the car service market, according to CEO Amit Bhasin. The company aimed to connect car owners with mechanics in their locality through a network of garages.
After a series of funding rounds, the startup expanded to 617 garages that have serviced more than 1 Lakh cars. Moreover, its services were priced lower than those of its competitors.
But the startup has been in a precarious financial position for the past few years. It was amid a $75-80 million fundraising with Masayoshi Son-backed SoftBank. Still, the deal was called off after due diligence flagged issues such as hypothetical garages and preferential payments to specific garage units.
Meanwhile, its second-largest investor, Orios Venture Partners, wrote down its investment in the company. It had also started a forensic audit against the startup after its co-founders admitted to falsifying figures to investors.
The startup’s forensic audit still needs to be completed, but it is expected to find glaring issues with its finances. Among other problems, the company had overstated its revenue in some periods and needed to disclose its ‘other expenses.
It accumulated more than INR 108 crores in ‘other expenses,’ which it did not explain. In addition, GoMechanic was unable to account for the cost of fuel used in its vehicles and overstated revenues by nearly INR 100 crores.
Founders admit to falsifying numbers.
Amit Bhasin, the founder of GoMechanic, admitted on his LinkedIn profile that he and other co-founders had falsified figures to attract new investors. Several of the company’s other investors also questioned the integrity of the figures that GoMechanic reported. The startup is still under a forensic investigation by EY. Moreover, the company’s biggest investor Sequoia Capital India has launched an independent review of its finances.