Indian consortium Lifelong Group has acquired GoMechanic, a Sequoia India-backed start-up that admitted to "grave errors" in financial reporting.
GoMechanic, which provides car repairs and cleaning services, had previously raised over $60 million and serviced 30,000 vehicles in January.
The New Delhi-based firm, which serves companies including General Motors and Hero, said it won an auction to buy the automotive start-up, which had struggled to sell the business after its financial issues came to light earlier this year.
The acquisition follows an embarrassing episode for the Indian start-up community after it emerged that GoMechanic's founders had inflated revenue figures, misstated facts, kept investors in the dark and attempted to raise new funding under false pretences.
An investigation by existing backers discovered many of its garages were fictitious, leading the start-up to cut costs and reduce its workforce by 70%. It had previously sought fresh investment from backers including SoftBank, Tiger Global and Malaysia's Khazanah.
Lifelong Group's acquisition of GoMechanic has "preserved the ecosystem at large and also enable(d) providing continued livelihood to the employees at GoMechanic," the group said in a statement.