Snapdeal promises higher salaries, job security to staff as investor SoftBank pushes for sale
The founders said the annual performance review process is nearly complete and employees will receive salary revision and promotion letters (where applicable) over the next two weeks.
New Delhi: Snapdeal founders Kunal Bahl and Rohit Bansal have reached out to employees promising them higher salaries compared to last year as the company heads towards a possible sell out in the coming weeks.
In a letter to employees, the founders said while the company's investors are "driving the discussions around the way forward", their "top and only priority was the well-being of the entire team".
"We will do all that we can, and more, in working with our investors to ensure that there is no disruption in employment and that there are positive professional as well as financial outcomes for the team as the way forward becomes clear," they said.
The founders said the annual performance review process is nearly complete and employees will receive salary revision and promotion letters (where applicable) over the next two weeks. "Given the incredible progress we have made around our profitability journey as a company, the overall increments this year are higher than those offered last year," they said.
According to sources, Snapdeal has about 3,000 employees in its e-commerce operations. The company also has mobile wallet (FreeCharge) and logistics (Vulcan) operations.
Snapdeal's largest investor SoftBank is believed to be re-working its plan for sale of e-commerce platform Snapdeal and a final decision is likely to be made in the next few weeks. Softbank is engaged in dialogue with other investors with board representation -- Kalaari Capital and Nexus Venture Partners -- to reach a consensus in terms of valuation, according to sources.
Snapdeal's seven-member board includes representation from investors SoftBank, Kalaari Capital and Nexus Venture Partners, as well as co-founders Kunal Bahl and Rohit Bansal. The board of Jasper Infotech -- that operates Snapdeal -- also has Bharti Enterprises vice-chairman Akhil Gupta as an independent director.
The country's third-largest online shopping platform could be sold to larger rival and market leader Flipkart and an announcement on the same is likely to be made in the next 4-8 weeks, sources said. Speculations also suggest that Alibaba-backed Paytm is also in fray as a potential buyer. Alibaba is also a shareholder in Snapdeal. So far, Snapdeal and SoftBank have continued to decline to comment on the matter. The deal, if completed, would mark the biggest acquisition in the Indian e-commerce space and change the landscape of the sector that is witnessing intense competition among players.
Sources have said one of the hurdles is valuation, as Kalaari Capital and Nexus Venture Partners have not agreed with the valuation given by SoftBank. Snapdeal was valued at US $6.5 billion in its last funding round in February 2016. The valuation has also shrunk since then and the potential deal could be struck at a discounted rate. The cash-strapped firm, over the last few months, has had to trim its workforce significantly and shut down non-core businesses.
Earlier this year, Snapdeal laid off about 600 people. Indian e-commerce companies have seen funding dry up over the last few months as investors are focussing extensively on profitability and rationalisation of expenses. With intense competition from deep-pocketed global rivals like Amazon, companies like Flipkart and Snapdeal could face more heat in the coming days.
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