Snapdeal To Lay Off 500-600 Employees
Co-promoters pledge to not draw salary.
Softbank-backed online retailer Snapdeal has decided to lay off around 500-600 employees as the Jasper Infotech Ltd.-promoted company faces fund crunch amid mounting losses, a company official requesting anonymity said.
In an email to employees reviewed by BloombergQuint, founders Kunal Bahl and Rohit Bansal said the company will be “combining teams, reducing layers” and bidding “really painful goodbyes to some of our colleagues in this process”.
Employee costs are the second highest expense for Snapdeal, with the total bill rising by 148 percent to Rs 911 crore in the last financial year from Rs 367 crore a year earlier. The retailer spent more only on marketing and advertising, show the documents filed with the Registrar of Companies.
The two co-founders also pledged not to draw salary for an unspecified period. Admitting mistakes, they said in the letter, “We believe that every resource of the company should be deployed for driving us towards profitable growth."
Has our company and industry been going through a troubled time? Absolutely. Did we make errors in our execution? No doubt about that.Kunal Bahl And Rohit Bansal, Co-founders Of Snapdeal To Employees
Mounting Losses
On the back of massive losses and funds drying up, the company shut down some of its divisions, including its Indian designer and handicraft platform Shopo.in earlier this month.
Snapdeal’s losses had more than doubled to Rs 2,960 crore in the last financial year ending March 2016, according to documents filed with the Registrar of Companies (RoC).
The founders accepted that the firm diversified aggressively without perfecting its core business. “We started building our team and capabilities for a much larger size of business than what was required with the present scale,” Bahl said.
Large amount of capital with ambition can be a potent mix that drives a company to defocus from its core. We feel that happened to us. We started doing too many things, and all of us starting with myself and Rohit, are to blame for it.Snapdeal Co-founder, Kunal Bahl To Employees
Snapdeal had also suspended its incentive programme for customers. However, the firm maintained that it is fine-tuning the programme and will roll out new plans over the next few days.
This will mean tough choices and a conscious departure from a me-too race to the edge of the cliff. Let’s remember – GMV (Gross Merchandise Value) is vanity, Profit is sanity.Snapdeal Co-founder, Kunal Bahl To Employees
Freecharge CEO Quits In 9 Months
Jasper Infotech, Snapdeal’s parent firm, also witnessed its third senior-level exit in two months, as on Wednesday FreeCharge’s chief executive officer Govind Rajan resigned just nine months after he was appointed to lead the digital payments subsidiary.
