At a time when one of the country's fastest grown unicorn, Shopclues, is almost on the brink of shutting down, it is grappling to survive by looking to reduce its team size to sustain operations for the next few months. Followed by lack of external funding, many existing senior employees have taken salary cuts.
The company has laid off around 200 employees and plans to let go of more people in the next few weeks. Till a few months ago, it had a strength of around 500 employees. The plan is to make Shopclues a lean organisation with around 70-80 executives.
"The plan is to make it a small team and keep the lights on," said one of the sources, privy to the development, adding that many senior executives in the company have not been paid salaries or have taken up to 70 percent cuts in the last couple of months.
Shopclues has denied any such development.
"There have been no salary cuts or non-payment of salaries to anyone across the organization," it said in a response to Moneycontrol's query.
It also did not confirm 200 people to be exiting the company. On the other hand, it said it has laid off 15 percent of its workforce, mostly across operations.
"Our recent restructuring allowed us to leverage our technology to reduce operational costs and we have out placed about 15 percent of our workforce, mostly in operations," it said.
"Leadership and management is very sensitive to the needs of our workforce. Transparency, over-communication and empathy define our culture. Besides our contractual obligations to our employees, we also ensure 100 percent out-placements to our employees," it added.
It claims that its enterprise business is now 15 percent of its revenue and Ezonow, its social media-based selling platform, has crossed 8 lakh re-sellers.
The condition of the company has deteriorated in the last few weeks after talks for an acquisition by its larger rival Snapdeal fell flat.
By April, the company had around Rs 12-15 crore in the bank. With a monthly burn rate of Rs 3-4 crore, it is quite clear that it is facing severe cash crunch.
The company has many marquee investor on board such as Tiger Global, Nexus Venture Partners and GIC among others.
Nexus, which is an investor in Snapdeal as well, tried to stitch a deal between the two companies. However, after talks of about three to four months, the deal fell flat.
According to people privy to the development, Snapdeal was considering to offer a valuation of $100 million to Shopclues for an all-stock purchase. However, Shopclues was eyeing a valuation of $250 million.
The latter had opened its books to Snapdeal for due diligence. However there was little that Snapdeal saw as assets on Shopclues' books.
Interestingly, this happened at a time when Snapdeal's revival story is the talk of the town with the company being recognised as the comeback kid in the e-commerce space.
"Snapdeal felt that the value Shopclues is bringing on the table is not much," said another source privy to the development.
Earlier Shopclues was also in talks for an acquisition by Paytm.
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