Snapdeal founders Kunal Bahl and Rohit Bansal have pledged to take no salaries for an unspecified period to help the company tide over its current cash crisis.
“We believe that every resource of the company should be deployed for driving us towards profitable growth and with this announcement, both Rohit and I are taking a 100% salary cut.Many of our leaders have also stepped up proactively and offered to take a significant cut in compensation,” CEO Kunal Bahl wrote in an email to employees.
Snapdeal’s founders were among the highest paid executives in Indian startups, with them taking identical Rs. 46 crore salaries,which included their vested stock options,last year.
Snapdeal cofounders’ pledge comes at a time when the company confirmed that it was undertaking layoffs and shutting non-core projects, as it looks to effect a turnaround. Affected employees are being offered three months’ salary as part of the severance package.
“We are combining teams, reducing layers, eliminating non core projects and strengthening the focus on profitable growth.Sadly , we will also be saying really painful goodbyes to some of our colleagues in this process.This is by far the hardest decision that we have ever taken in our lives,“ the email stated.
Sources said a combined 500-600 people will be laid off from Snapdeal and its logistics business Vulcan Express and digital payments unit FreeCharge.
Snapdeal has also trimmed its operations, shutting down its sister sites Exclusively.com and Shopo to focus on its core business. There has also been significant churn among its management,Freecharge CEO Govind Rajan resigned from his post. In the past few months, Sandeep Komaravelly, head of peer-to-peer marketplace Shopo; Tony Navin, head of partnerships and strategic investments; and Abhishek Kumar, head of corporate development had also resigned.
Snapdeal was valued at $6.5 billion after a fund-raising last year but its valuation is under threat like its bigger rival Flipkart, which has been marked down by investors.
E-commerce in India, one of the world’s fastest growing internet services market, has largely been driven by steep discounts, resulting in investor markdowns due to concerns about profitability.
Snapdeal is backed by Japan’s Soft Bank, Taiwanese conglomerate Fox conn and China’s Alibaba Group.
For the financial year 2015-16, the company’s total sales grew 56% to Rs 1,457 crore, but losses more than doubled to Rs 2,960 crore.