Snapdeal in doldrums with just $100 mn in bank: Srcs
According to a source privy to the developments, Snapdeal was expected to let go off about 500 employees from the overall technology team spread across Bengaluru and Gurgaon.
Gurgaon based e-commerce firm Snapdeal is left with just over USD 100 million in the bank, two people privy to the development told Moneycontrol.
The company is trying to reduce its cash burn which includes people cost, fixed overheads and technology cost. It has brought down its burn rate to around USD 10 million per month against around USD 30 million in December and reduced discounts to both sellers and buyers.
The company is undergoing massive layoffs. According to a source privy to the developments, Snapdeal was expected to let go about 500 employees from the overall technology team spread across Bengaluru and Gurgaon. The company did not revert to an email questionnaire by Moneycontrol on the same.
Since its inception in 2010, the Gurgaon-based firm has raised USD 1.75 billion from investors such as Softbank, Kalaari Capital, Temasek, Alibaba Group, eBay and others.
Also read: From funding to investments: A look at Snapdeal’s numbers
In 2015, the company had launched a 4-hour delivery service called Snapdeal Instant. The small 15-member team at Snapdeal Instant is also being impacted, sources quoted above said.
The crisis at Snapdeal has been triggered by the fact that one of the major investors in the company had pulled out last year from investing a follow-on round, as the company is yet to show any path to profitability. Demonetisation has had a double whammy on the business, sellers selling on Snapdeal disclosed.
Existing employees await clarity on future
One of the employees whose team has completed the laying-off process said that now things seem to be coming back to normal.
"The team heads are trying to ensure that employees get back to work. They are addressing their concerns in their limited capacities," he said.
The two founders Kunal Bahl and Rohit Bansal had admitted to mistakes in an extensive e-mail to the employees. They accepted that there were "errors in execution" of the business.
Snapdeal crisis: What Kunal Bahl said in an e-mail to employees
The email said that the company had to realign resources with continued focus on efficiency and profitability and turn into a lean, focused and entrepreneurial company.
According to one of the sources mentioned above, the letter was mostly addressed to people who were to be laid off.
Snapdeal's orders have come down to around 65,000-70,000 per day as the company has done away with discounts.
"The funding has dried up. The letter was apologetic in nature which was unwarranted. What we want is a larger clarity on what will happen to employees who are retained," the Snapdeal employee said.
Amidst the crisis at Snapdeal, the company is also reported to be in merger talks with Alibaba-backed Paytm.
As shared earlier in various media interactions, we are well capitalized to reach profitability. Any allusions to the contrary are incorrect, baseless and speculative.