Layoffs continue to haunt the economy and India's 'Make in India' world is no exception. Leading Bengaluru silk yarn startup company, Reshamandi has laid off 80% of its team.
One of the major factors leading to the collapse of the Bengaluru startup, is its strategy for rapid expansion as a 'growth-at-any-cost' approach. This step was taken after the company had encountered financial challenges after it failed to obtain series B funding.
The incident has ignited a discussion on the importance of forming proper financial strategies for risk management, keeping in mind about the strategies that are favourable for employees.
This Indian firm had gotten a lot of money put into it, yet it still ended up failing to operate (hence laying off their workers). There is a growing suspicion that ReshaMandi might have overstated its profits for 2022 and 2023, causing shareholders such as Temasek to withdraw their support on discovering such variances.
The company had 500 employees in January 2023. However, that number dropped to about 100 by the end of that year. In June 2023, people started talking about job cuts for the first time, indicating no pay for three months.
The ReshaMandi layoff of 80% employees serves as a warning for fledgling companies pursuing quick expansion without a strong economic base. It highlights the significance of careful financial strategy and the necessity for startups to maintain a balance between ambition and long-term viability.
Established in 2020, ReshaMandi was a leading startup in the silk yarn industry. Its goal was to transform the business-to-business fashion and textile supply chain using innovative technological solutions.
The firm managed to secure more than US$40 million in equity funding from prominent investors such as Creation Investments, Omnivore, and Venture Catalysts.
When the dust has finally cleared over that regrettable happening, the next most important thing becomes knowing what prospects will come to the affected employees in addition to lessons that have been learnt therein.
In anticipation of this, it is expected that the industry will adopt better methods of running a business and have favorable working conditions for people who own them as well as their workers.
The firm also obtained almost ₹300 crore in loan from venture debt providers and creditors.
In the first half of 2024, over 98,000 workers were laid off by more than 330 companies globally, causing a hiring spree in the tech industry. Among the 333 businesses affected by staff downsizing include big names like Apple, Google, Microsoft and Meta.