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The purpose of this study is to investigate microbial influenced corrosion of steel because of iron oxidizing bacteria (IOB).

Carbon steel was selected for this study. Winogradsky media was used for isolation of IOB and as test solution for corrosion measurements. Electrochemical tests and immersion test were conducted to estimate the corrosion rate and extent of pitting. The corroded surface was analysed by SEM and corrosion products formed over the metal surface were identified by XRD and Fourier transformed infrared. Biofilm formed over the corroded metal was analysed by UV-visible spectroscopy for its extracellular polymeric substances (EPS) constituents.

Presence of IOB in Winogradsky medium enhances corrosion. Uniform and localized corrosion increases with increased bacterial concentration and EPS constituents of the biofilm. Iron sulphite formation as one of the corrosion products has been suggested to be responsible for increased corrosion attack in the inoculated media in comparison to control media where corrosion product observed is iron hydrogen phosphate which is protective in nature.

This work correlates increased corrosion of steel in the presence of bacteria with the nature of corrosion products formed over it in case of IOB. Formation of corrosion products is governed by various electrochemical reactions; hence, inhibition of such reactions may lead to reduce or stop the formation of such products which enhances corrosion and thereby may reduce the extent of microbial induced corrosion.

The case study is designed to help students understand how the “growth at all costs” attitude can lead to compromised corporate governance in a start-up leading to disastrous implications for all the stakeholders. This case study aims to make students understand the components of the fraud triangle, the impact of financial fraud on various stakeholders, the role of venture capitalist (VC) investors and the importance of good corporate governance in start-ups. The case study presents an excellent opportunity for students to discuss the consequences of ignoring good governance in the pursuit of growth in a start-up. After analyzing the case study, the students shall be able to explain the concept of the fraud triangle and to be able to identify the motivation, opportunity and rationalization of financial irregularities in a start-up; analyze the impact of financial irregularities on various stakeholders; comprehend the business model of VCs and evaluate its influence on VC-funded start-ups; and appraise the importance of good corporate governance in start-ups.

The case study revolves around the confession of financial irregularities made by one of the cofounders of GoMechanic, a start-up headquartered in Gurugram, India. On January 18, 2023, Amit Bhasin confessed to financial irregularities in the company’s financial statements, leading to laying off 70% of the workforce of the company. GoMechanic had earlier raised close to US$62m [1] from maverick global investors including Sequoia Capital, Tiger Global, Orios Venture Partners and Chiratae Ventures, and was negotiating to raise Series D financing from the Japanese multinational SoftBank with aspirations to be a unicorn (start-up with a valuation of over $1bn). The confession led to a debate about the consequences of the “growth at all cost” culture being followed by start-ups as well as VCs. GoMechanic was not an isolated instance of a lack of governance in the start-ups. The confession had consequences not only for the GoMechanic but for the entire start-up ecosystem of India, which was the third largest in the world. Bhasin stated that the founders take full responsibility for the situation, and they were working on a plan which was most viable under the circumstances. However, it was not going to be easy to regain the confidence of the investors.

The case study is best suited for senior undergraduate- and graduate-level business school students and in executive education programs in courses such as corporate governance and ethics, private equity and entrepreneurial finance.

Teaching notes are available for educators only.

CSS 1: Accounting and finance