With planned layoffs of around 500 to 600 people over the next few days, clouds of uncertainty loom over the future of online marketplace Snapdeal, once India's start-up posterboy. In an official communication to its employees, the founders admitted to some serious flaws in their strategy.
Further, the founders of Snapdeal pledged to take a 100 per cent salary cut. As per the Registrar of Company records, the founders received a compensation of Rs 52.94 crore (as per form 16) each in 2014/15, significantly higher from Rs 1 crore each in the previous fiscal.
The ill health of the company can easily be diagnosed from its mounting losses which significantly jumped over 120 per cent in 2015/16 to Rs (-) 2,960 crore from Rs (-) 1,319 crore in 2014/15.
Its revenues, however, rose 55.3 per cent over the period. Its employees expenses, the next biggest expense head of the company after advertising expenses, shot up around 148 per cent to Rs 911 crore in 2015/16 from Rs 367.19 crore in the previous fiscal.
Clearly, mounting employee expenses, proved to be the Achilles heel for the company.
The company, founded in 2010, has seen 12 rounds of funding, raising a total equity funding of $ 1.7 billion, according to the data from Tracxn. It has been struggling to raise funds fresh funds recently, with $221 million raised in 2016 compared to $ 500 million raised in 2015.
Snapdeal has also suffered a devaluation-valuations went down to $ 4 billion currently from $ 6.5 billion in February 2016. The top-level exits continued at Snapdeal with Anand Chandrasekharan, Chief Product Officer; Tony Navin, Head of Partnerships and Strategic Investments; Abhishek Kumar, responsible for the acquisition of FreeCharge mobile wallet; and Sandeep Komaravelly, head of mobile customer-to-customer marketplace Shopo, leaving the company.
It plans to sell its digital wallet FreeCharge which it acquired in April 2015. Another acquisition which did not pay-off was Exclusively.in, a premium fashion platform which shut down within 18 months of acquiring it. Four years after buying it in 2013, Snapdeal shut down its C2C marketplace Shopo. Let see if these layoffs help Snapdeal tide over the tough times.
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