WayCool Foods Lays Off Over 200 Employees in Third Round of Layoffs Amid Financial Struggles
- ByStartupStory | July 26, 2024
Chennai-based agritech startup WayCool Foods has laid off over 200 employees across various departments, marking the third round of job cuts within the last 12 months. This decision comes as the company strives to streamline operations and mitigate financial losses amid ongoing funding challenges.
The Lightbox-backed startup had previously reduced its workforce by over 300 employees in July 2023, followed by another round of layoffs affecting 70 staff members in February 2024. The latest cuts impact employees in Chennai, Bengaluru, Hyderabad, and its subsidiaries, CensaNext and BrandNext.
Sources familiar with the situation have reported worsening financial conditions for WayCool, including delayed salaries and client payments. “Salaries have been delayed in the past, and the company is yet to process the June payslip. Funding has dried up, and the payments from clients are stuck,” as per Moneycontrol reports.
The financial strain has also led to unpaid dues to vendors, including millers, logistics partners, and service providers like SGSs. “Vendor payments were made in rotation over the past three months, but this has completely stopped since June as collections from clients have been delayed,” the sources added.
WayCool acknowledged the layoffs as part of its restructuring efforts aimed at achieving profitability. “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,” the company stated in a written response to Moneycontrol.
However, the firm did not disclose the exact number of employees affected by the latest layoffs.
On the topic of funding, WayCool reported that it has secured 75% of the capital from its ongoing bridge round of $40 million and expects to complete the fundraising by August. The company believes this funding will provide the necessary runway to achieve cash profitability.
Since November last year, WayCool has been seeking bridge funding from existing investors to address its liquidity challenges. In 2023, the company’s attempt to raise $50-70 million at a $900 million valuation was hampered by the funding winter, leading to reductions in employee costs and extended financial runway.
“The company’s focus continues to be on the growth of brands and their establishment as true consumer brands. 45 percent of revenues in FY24 came from brands, a share that continues to increase,” WayCool added.
Although details of the current funding round remain unclear, WayCool was last valued at $700 million in June 2022, and a valuation increase in the ongoing round seems unlikely.
Founded by Sanjay Dasari and Karthik Jayaraman, WayCool started in 2015 as a supply chain business for agricultural products and expanded into the consumer packaged goods space in 2018 with brands like Madhuram, Kitchenji, and Freshey’s. The company later spun off its FMCG business into a new entity, BrandsNext, which houses seven brands, including L’exotique, Dezi Fresh, AllFresh, and Just Potate.
WayCool also operates a supply chain tech platform, Censa.
In a related development, BP Ravindran, CEO of BrandNext since April last year, has exited the company. While WayCool has not explicitly confirmed Ravindran’s departure, their statement regarding management changes indirectly supports this information. The company noted, “There are indeed management changes in line with the above, and successors have stepped in where changes were needed.”
Despite cost-cutting and restructuring measures, WayCool’s financial difficulties persist. The company has not yet released its financial statements for FY24 but recently disclosed its results for the fiscal year ending March 2023 after an 11-month delay. According to data from TheKredible, WayCool’s revenue from operations grew by 62% to Rs 1,251 crore in FY23 from Rs 772 crore in FY22. However, the costs remained high, resulting in an 89% increase in losses to Rs 685 crore. Overall expenses, including the cost of procurement, employee benefits, advertising, and transportation, rose by 71.3% to Rs 1,951 crore in FY23.
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