Meesho or Fashnear Technologies Private Limited has recently been in news not because of their high valuation fund raise but because of their recent announcement of firing over 150 employees in one go.
Meesho was founded in 2015 by Vidit Aatrey and Sanjeev Kumar Barnwal and became a pioneer in social commerce when their valuation rose to over 4.9 billion dollars.
The recent layoffs have been done in their grocery department and it's said that Meesho is in the market to raise over 1 billion dollars.
According to the documents obtained by EasyLeadz from the Ministry of Corporate Affairs, the biggest expense done by Meesho in the year 2018-19 was the employee benefit expenses which were at INR 315456408 i.e approximately 31.5 crores.
This was a 10 fold increase from the previous which was only at 3.6 crores.
The other expenses done by Meesho were of the tune of 1535287199 i.e approximately 153.5 crores in the same year 2018-19.
This “other expenses” could be attributed to their advertising spends on marketing activities they do to acquire customers and it’s a two fold increase from the previous year.
Overall if we consider the losses as mentioned by Meesho in their filings, it was to the tune of over 100 crores in 2018-19 and in 2017-18 they were approximately 11 crores. Thus a 10 fold increase in the losses.
Based on the above growth trajectory, their losses and the expenditures they are making it was about time that the management at Meesho may have decided to reduce their losses.
They may not afford to spend less on marketing or customer acquisition thus they decided to cut expenses through the employee benefits.