Chennai-based company cuts over 200 jobs, bringing total layoffs to more than 500 in less than a year amid financial challenges
Introduction:
WayCool, a prominent agritech startup based in Chennai, has initiated its third round of layoffs in less than a year, letting go of over 200 employees across various departments. This move brings the total number of job cuts at the company to more than 500 since July 2023, highlighting the growing financial pressures faced by the agriculture supply chain firm.
Founded in 2015 by Karthik Jayaraman and Sanjay Dasari, WayCool has been working to modernize India’s agricultural supply chain. The company operates across multiple channels and categories, including fresh produce, staples, and dairy, serving over 165,000 clients in general trade, modern trade, and food services.
Details of the Layoffs:
The recent layoffs have affected employees across multiple locations, including Chennai, Bengaluru, and Hyderabad. The job cuts have impacted various departments and subsidiaries, including CensaNext and BrandNext. This marks the third significant reduction in workforce for the company, following previous rounds in July 2023 and February 2024.
WayCool has acknowledged the layoffs as part of its ongoing restructuring efforts aimed at achieving profitability. A company spokesperson stated, “Each of WayCool’s businesses is executing their plans to get to profitability. As part of this, roles and structures are further simplified and automated. This will be a continual process.”
Financial Challenges:
The company’s financial struggles extend beyond job cuts. Sources report delayed salary payments, with June payslips yet to be processed. Additionally, WayCool is facing challenges in making payments to vendors, including millers, logistics partners, and service providers.
While the company has not yet filed its annual report for FY24, its previous financial statements indicate significant challenges. For the fiscal year ending March 2023, WayCool reported a 62% increase in operating revenue to Rs 1,251 crore. However, its losses surged by 89% to Rs 685 crore in the same period.
Funding Situation:
WayCool is currently in the process of raising a bridge round of funding. The company states that it has received 75% of the capital from this round and expects to complete it by August. WayCool believes this capital infusion will provide sufficient runway to reach cash profitability.
To date, the company has raised a total funding of $341 million from investors such as LightRock, LightBox, Aspada, FMO, Lightsmith, World Bank Group’s IFC, and Redwood Equity Partners. Its last reported valuation was $711 million.
Strategic Focus:
Despite the challenges, WayCool is focusing on growing its brand portfolio. The company reports that 45% of its revenues in FY24 came from its brands, a share that continues to increase. This shift towards branded products may represent an attempt to improve margins and achieve profitability.
Implications for the Agritech Sector
The troubles at WayCool raise questions about the sustainability of business models in the Indian agritech sector. Despite the potential for technology to transform India’s agricultural landscape, many startups in this space are struggling to achieve profitability.
The situation at WayCool may prompt investors to reassess their approach to agritech startups, potentially leading to more scrutiny of business models and a greater emphasis on clear paths to profitability.
As WayCool navigates through this challenging period, its ability to achieve profitability while maintaining its core operations will be closely watched by industry observers. The coming months will be critical in determining whether the company can weather this storm and chart a path towards long-term viability, potentially setting a precedent for other players in the Indian agritech space.
