Online fashion retailer Voonik has reportedly told 200 of its employees that it will not be able to give them their salaries for the next three months, as it seeks to undertake large cost-cutting measures, according to a Times of India report.
The Bengaluru-based company at present has about total 350 employees. The workers who are expected to be affected are largely from the product development and customer support teams. However, the operation teams will not be a part of this move for now.
Voonik Chief Executive Officer and co-founder Sujayath Ali said in a meeting on Monday that those who will quit the company will get a month's salary as severance package.
This comes at a time when the company is just one or two months away from EBITDA (earnings before, interest, tax, depreciation, and amortisation) and profitability. Ali said there will be changes in the employee structure to achieve this.
"We have done this exercise in the past as well and we always have paid back the deferred salary," Ali said.
But while most reports have talked of the company not giving salary to the 200 employees, one website has said the information is incorrect.
It quoted Sujayath Ali as saying in email in response to their query: "This is incorrect information and we deny it. In an all-hands meeting, I had asked team members to be ready for an uncertainty in the worst-case event of the salary payments being delayed. We have full intent of paying the salaries on time. It was an exercise of preparing the team to be ready for self-sustenance from operational cash flow instead of continuing to spend from investor money."
However, reports suggest that the company has said in official record filed with the Registrar of Companies (RoC) that its losses have surged 18 times due to increased expenditure and robust competition from big rivals like Myntra, Jabong, Yepme, Amazon and Limeroad.
Further, according to sources, the fashion e-tailer which seeks to hire employees for senior roles is not in a position to sustain such highly-paid profiles. Sources also said many senior executives are now looking to quit the company as its future is uncertain.
Other e-commerce sites like Craftsvilla and Zivame have also gone through major structural revival to compete against e-commerce giants like Myntra-Jabong and Amazon.
Snapshot of Voonik
Voonik was founded in 2013 by Sujayath Ali and Navaneetha Krishnan. It is an online shopping platform for women's apparels, accessories, footwear and beauty products. They have recently launched products for men as well.
The online fashion start-up raised about $27 million funding from investors such as Sequoia Capital, Times Intranet, Seedfund and Beenos.
Voonik initiated its business as a personal stylist, and later diverted to an online marketplace for unbranded fashion early last year. Since then, it has raised funds in several rounds and made a few acquisitions in areas like chat box and image recognition.
"Voonik is a fashion discovering platform for affordable style. Our aim is to take fashion to the masses." Ali told IBTimes India in an interview.
