Udaan is laying off about 120 people or 6 per cent of its workforce of 1,600, as the country’s largest business-to-business (B2B) e-commerce firm focuses on profitability amid tight liquidity conditions and a global economic slowdown.
“The layoffs would take place by the end of this month and they are related to the food and non-food division merger,” said a person familiar with the matter.
Udaan stated it has already made significant progress in its journey towards building a profitable business and continues to make relevant interventions to its business model.
“However, these interventions have also resulted in some redundancies in the system,” said a Udaan spokesperson. “As a responsible organisation, we are working towards providing all requisite support to the impacted employees, which includes medical insurance, a compensation package as per company policy, and placement assistance.”
The development comes at a time when Udaan recently raised $340 million in Series E financing, signalling a slow return of deal momentum. It was led by M&G plc, with participation from existing equity investors Lightspeed Venture Partners and DST Global.
The Bengaluru-based company didn’t reveal if the funding had changed its current valuation of $3.1 billion. According to industry sources, it is likely to be less than the current valuation due to macroeconomic uncertainty. Udaan said its business is fully funded and on course to achieve its objective of becoming profitable and being public market-ready in the next 12–18 months.
Over the past two years, Udaan said it has made consistent progress on its sustainability agenda, with eight consecutive quarters of improving profitability. This was driven by interventions in its business strategy and business model while following the “efficiency with excellence” agenda.
Last year in November, Udaan laid off 350 employees, or 10 per cent of its workforce of 3,000. This was done across department functions in a move to drive cost efficiency. Before that, in June last year, the firm sacked 180 employees.
Udaan’s gross merchandise value (GMV) decreased by 43.1 per cent to Rs 5,629 crore in FY23 from Rs 9,900 crore in FY22, according to media platform Entrackr. The sale of traded goods on the online platform was the primary revenue driver for the company, accounting for 96 per cent of the total gross merchandise value. This income shrank by 43.7 per cent to Rs 5,408 crore in FY23. Udaan’s losses contracted 33.7 per cent to Rs 2,076 crore in FY23 from Rs 3,132 crore in FY22, according to Entrackr.
Over the last 12 months, Udaan said it has seen strong and steady validation of its multi-category cluster-anchored business strategy. The company is now reinforcing it with a regional cluster-led operating organisation that enables strong execution capabilities while promoting ownership and accountability at the regional level, to drive sustainable growth.
First Published: Dec 18 2023 | 5:04 PM IST