In order to pacify the employees aboard its drowning ship, Snapdeal has ensured profits in the next couple of years. In a recent report published by Reuters, the company is now said to be hosting more than necessary town hall meetings over the past few weeks. These meetings were only open for the Snapdeal employees, wherein the management dismissed takeover talks and other such reports out in the market.
As we all are aware, the homegrown e-tailer is currently in a pretty tight spot over a boardroom investors’ feud, owing to its repute as the third largest online marketplace in India after Flipkart and Amazon. The inability to raise fresh funds thus impacts the company’s hard-working employees, infiltrating their minds with stability concerns.
The sources say that there have been five meetings within the past week itself, with founders Kunal Bahl and Rohit Bansal blabbering motivational lectures and gabbling words of wisdom to queries of employees. Quoting an instance, being asked whether the company eyed a takeover deal, they said,
It [The goal] was only profitability and profitability.
Moreover, two employees and three anonymous individuals familiar with Snapdeal’s internal strife said there were concerns over the group’s direction, as well as over contradictory messages from their investors. While some demand profits, other early investors seek only growth. However, the spotlight was on increasingly, over potential senior-level departures and cuts at Snapdeal.
These concerns saw an unbolted surge after the company sacked about 600 employees along with the departure of FreeCharge’s CEO Govind Rajan. The company is currently dependent on hefty cash burns to push sales through discounts. If Snapdeal’s sale becomes successful, it would have huge ramifications and not just in the Indian startup ecosystem but also on the country’s consumer internet sector. However, this seems to be a pretty tough target to achieve considering halt of services by 40% of merchants due to pending dues and building pressure from banks.
Adding to its predicament, reports suggest that SoftBank has pulled back its $150-200 million debt financing offer. SoftBank being the largest stakeholder in Snapdeal is squaring off against two of Snapdeal’s early backers — Kalaari Capital and Nexus Venture Partners. A person aware of the matter said that both Kalaari Capital and Nexus Venture Partners are livid at the developments, and have questioned SoftBank about its intention with regards to Snapdeal.
A term sheet was located by a source offering Snapdeal debt financing for a period of three years, which was, inexplicably, withdrawn within days, giving credence that SoftBank has made up its mind about selling the company. If the new funding is not coming to the company, the only way forward for it seems to get acquired by a bigger player. In face, SoftBank is said to be leading discussions of a potential merger with Flipkart (Paytm’s CEO has already denied any involvement). Sources further revealed that no other stakeholder is involved in such talks.