CarTrade Tech Ltd is shutting down the auto sales arm of OLX India, acquisition of which was only completed nearly two months ago.
In August, the company had completed the acquisition of a 100 per cent stake in Sobek Auto India Pvt Ltd, consisting of the OLX classifieds platform and OLX Autos C2B transaction business, for nearly Rs 536 crore.
In a regulatory filing on Wednesday, CarTrade said that Sobek, which is its wholly owned subsidiary, has made a strategic decision to close down their own C2B (consumer to business) operations of the auto transaction business due to challenges faced with its unit’s economics. It added that Sobek will continue to grow its classified business (Olx.in —which includes both auto and non-auto verticals).
“The board of directors of Sobek at their meeting held on Wednesday have decided to shut down their own C2B operations and reduce human resource and other administrative cost of the said business and explore partnerships with other players,” it added.
The announcement led to shares of CarTrade jumping on the bourses and it settled at Rs 643.95, marking a gain of 4.51 per cent over the last close.
CarTrade added that the classified business demonstrates profitability and substantial potential for future growth and that Sobek has made the strategic decision to concentrate its resources on this business, recognising its immense potential for sustained growth and value creation.