Chennai-based agriculture supply chain startup WayCool Foods has laid off over 200 employees across departments, sources told Moneycontrol, marking the third round of layoffs within last 12 months.
The move comes as the company continues to steamline operations to cut down losses after struggling to close funding.
The Lightbox-backed startup had previously laid off over 300 employees in July last year, followed by termination of 70 staff members in February this year.
The latest round has affected employees across Chennai, Bengaluru and Hyderabad, and its subsidiaries -- CensaNext and BrandNext.
Sources have reported worsening financial difficulties for the company, including delayed salaries and client payments.
“Salaries have been delayed in the past, and the company is yet to process the June payslip. Funding has dried up, and the payments from clients are stuck,” two of the sources close to the development tell.
Additionally, unpaid dues to vendors, including millers, logistics partners, and service providers like SGSs, have exacerbated the situation.“Vendor payments were made in rotation over the past three months, but this has completely stopped since June as collections from clients has been delayed,” he added.
WayCool acknowledged the layoffs as part of its ongoing restructuring efforts aimed at achieving profitability.
“Each of WayCool's businesses is executing their plans to get to profitability. As part of this, roles and structures are further simplified and automated. This will be a continual process,” the company said in a written response to Moneycontrol.
However, the firm did not disclose the exact number of employees affected.
On funding crunch, the company stated that it has secured 75% of the capital from its ongoing bridge round of $40 million and will complete the fundraise by August, which it believes will provide a sufficient runway to reach cash profitability.
Waycool has been pursuing to raise a bridge funding from existing investors since November last year to address its liquidity challenges, Moneycontrol reported. In 2023, the company’s attempt to raise $50-70 million at a $900 million valuation was impacted by the funding winter, forcing WayCool to reduce employee costs and extend its financial runway.
“The company’s focus continues to be on the growth of brands and their establishment as true consumer brands. 45 percent of revenues in FY24 came from brands, a share that continues to increase,” the firm added.
While the contours of the round remain unknown, WayCool was last valued at $700 million in June 2022 and is unlikely to see an uptick in valuation in the ongoing round.
Founded by Sanjay Dasari and Karthik Jayaraman, the food and agritech platform started out in 2015 as a supply chain business for agriculture products. It soon ventured into the consumer packaged goods space in 2018 through brands such as Madhuram, Kitchenji, and Freshey's.
The firm later hived off its FMCG business into a new entity called BrandsNext—which now houses about seven brands besides the said three, including L’exotique, Dezi Fresh, AllFresh, and Just Potate.
WayCool also runs a supply chain tech platform called Censa.
FMCG entity CEO quits
In a related development, BP Ravindran, who was appointed CEO of BrandNext in April last year, has exited the company, a senior industry executive tells.
While WayCool has not explicitly confirmed Ravindran’s departure, their statement regarding management changes indirectly supports this information.
The statement included, “There are indeed management changes in line with the above, and successors have stepped in where changes were needed.”
Losses widen
Despite cost-cutting and restructuring measures, WayCool’s financial struggles are evident.
While the company is yet to release its financial statements for FY24, it recently disclosed its results for the fiscal year ending March 2023 after an 11-month delay.
According to data from TheKredible, the company's revenue from operations grew by 62 percent to Rs 1,251 crore in FY23 from Rs 772 crore in FY22. However, costs remained high, leading to an 89 percent increase in losses to Rs 685 crore.
The overall expenses, including cost of procurement of materials, employee benefits, advertising, transportation etc., were up by 71.3 percent to Rs 1,951 crore in FY23.
The agritech firm is backed by the likes of Lightrock, Lightbox, Lightsmith Group, 57 Stars, FMO, Huruma (managed by GAWA Capital), among others, and has raised debt from Trifecta Capital, Stride Ventures and Innoven Capital.
The latest ongoing bridge round, of which the firm claims to have received 75 percent of the capital, may provide WayCool with the necessary funds to stabilise its financial situation and extend its runway until it reaches cash profitability.
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