Snapdeal to reduce staff to tide over cash crunch; founders take 100% pay cut
Online marketplace Snapdeal, which is struggling to raise fresh capital, will cut its workforce as it looks to conserve cash. The company, however, didn’t disclose the number of job cuts.
“On our journey towards becoming India’s first profitable e-commerce company in two years, it is important that we continue to drive efficiency across all parts of our business, which enables us to pass on the value to our consumers and sellers. We have realigned our resources and teams to further these goals and drive high-quality business growth,” a Snapdeal spokesperson said on Wednesday.
Snapdeal said on Wednesday that its logistics unit, Vulcan Express, is expected to turn profitable by the middle of the year.
Mint reported on February 17 that Jasper Infotech Pvt Ltd, which runs Snapdeal, had about ₹1,100-1,200 crore cash left in the bank and ₹300-400 crore at its payments unit Freecharge at the end of 2016.
Talks for a bridge round of funding with existing investor SoftBank Group Corp were deferred due to differences over valuation, Mint reported then.
It has also seen the departures of senior executives, including Freecharge chief executive Govind Rajan and Tony Navin, head of partnerships and strategic investments, in the past two months.
Meanwhile, PTI reported that Snapdeal co-founders Kunal Bahl and Rohit Bansal have taken a 100% salary cut, while many others at the firm have “proactively” offered significant reduction in compensation.
In an e-mail to employees, Bahl conceded that over the last two to three years, with all the capital coming into this market, the company and the entire industry “started making mistakes”.
“We started growing our business much before the right economic model and market fit was figured out. We also started diversifying and starting new projects, while we still hadn’t perfected the first or made it profitable. We started building our team and capabilities for a much larger size of business than what was required with the present scale.”