India’s largest e-tailer Flipkart has pushed back the joining dates of new recruits from several top B-schools by six months, triggering speculation that a funds crunch and falling valuation are troubling the start-up.
A week after the firm deferred the joining dates of fresh hires from IIM-Ahmedabad and Bangalore, students at XLRI in Jamshedpur, ISB in Hyderabad and FMS in Delhi have had similar experiences.
“Flipkart has not made direct contact with the institute, instead they have informed the students about a six-month delay in the joining date” said Rajiv Mishra, chairman of the XLRI placement cell.
FMS said the institute is exploring placement options with other online majors such as Shopclues, Paytm and Amazon.
Eight students from XLRI (Xavier Labour Relations Institute) and one from FMS (Faculty of Management Studies) have been asked to wait by Flipkart, in addition to 18 from IIM-Ahmedabad and 11 from IIM-Bangalore.
ISB (Indian School of Business) refused to release hiring figures.
The unusual postponements — the company has cited organisational restructuring as the reason — sparked rumours that the face of India’s start-up culture is in trouble.
Set up in 2007, Flipkart grew on the back of heavy discounts that led to losses of over $40 million a month, experts say.
Competitors such as Snapdeal and Amazon were burning half of what Flipkart was spending monthly.
But things worsened because of a slowdown in the United States and China. Investors — venture capitalists and hedge fund managers — started taking a second look at the discount-led model and corrected valuations.
Flipkart’s valuation fell by a third to under $10 billion. Even venture capitalists — known to take risks — started looking at a definitive path to profitability.
Naren Gupta, co-founder at Nexus Venture Partners, said in a television interview that as most of the unicorns were in e-commerce, there might be a likely demise of one of them.
Some of the new recruits told HT they were ready to wait but many were miffed at the lack of professionalism shown by the company, especially in the face of mounting student loan debt.
A lengthy post on the company’s website said organisational restructuring was the reason behind the delays and the firm was committed to having the new recruits on board by December.
Last week, Flipkart burnt its fingers after it pushed back the joining dates of IIM students and offered them `1.5 lakh as compensation for the delay.
The placement cell of IIM-Ahmedabad asked the company to confirm that these students would be absorbed by December.
“The company has cited organisational restructuring for the delay in joining dates. We will get more clarity on the placement next week, after which we will decide our plan of action,” said K Sanjay Koushik, media secretary, students’ affairs council at IIM-A.
A statement by ISB said the e-commerce sector was an evolving sector in India and it was “only natural to expect high risks given its high growth and corresponding fast-paced development and uncertainties”.