Online classifieds and services portal Quikr has let go off around 500-600 employees across multiple different job roles which have impacted at least three of its verticals including real estate, Quikr Jobs, and automobile segments, according to two people aware of the development. Quikr employed around 3,000 employees before the layoffs.
The Bengaluru-based startup’s decision to lay off employees comes shortly after it suffered crores of losses due to an internal employee fraud, said an ex-employee aware of the development requesting anonymity. The scam was orchestrated by mid-senior employees in the sales team at Quikr’s real estate product Grabhouse, the person added. The development was first reported by Deccan Herald on 13th December.
Quikr has been on an acquisition spree ever since its inception in 2008. It has spent millions, mostly in stock, acquiring 15 firms to date. In November 2016, Quikr had acquired Grabhouse in an all-stock deal worth $10 million, which also included employees from Grabhouse joining Quikr’s main real estate team.
Grabhouse offers a managed rental product similar to rivals such as Nestaway and Zolostays which operates on a revenue-sharing deal with landlords and property owners. Grabhouse leases properties from owners and converts it into a branded offering by installing amenities such as WiFi, furnishings, etc.
“Some of the sales executives at Grabhouse who later became employees of Quikr formed an internal cartel…they created fake papers for properties that were being on-boarded onto Grabhouse. These properties were basically non-existent,” said the ex-employee quoted above.
Quikr pays a security deposit of anywhere between Rs5-10 lakhs to property owners which are also used for the renovation of the property. This amount was directly pocketed by the scamming employees at Grabhouse, added the person mentioned above.
“They (Grabhouse employees) scammed Quikr ever since its acquisition in 2016…They claimed deposit money via bogus bank accounts. The employees also released some money back to Quikr (as rental revenue) to further falsify customer payments,” said the ex-employee.
Mint wasn’t able to independently verify the value of the entire scam. However, the person mentioned above said it could go up to “crores in single digit”.
Both sources mentioned above added that scam and layoffs at Quikr are not inter-related. Layoffs at Quikr began in early November across business functions such as business development, sales, operations, and the tech team mostly due to overlapping of roles, added the two people quoted above.
“Verticals including jobs, automobile, and realty which reported to chief operating officer Atul Tewari took a huge hit in terms of job cuts, even though these through verticals were operationally profitable,” said the ex-employee.
“Due to our cross-category model, we get a good view of comparative economics of various categories we operate in. Based on this view, we recently decided to tweak the operating model in some of our categories, including a change in some market offerings and rationalization of about 30% of our workforce…Certain anomalies have come to our notice in our PG transaction business involving our employees and we are working with external parties for legal action against all the parties involved. We may not be able to disclose more information as it may hamper the ongoing investigation,” said a Quikr spokeswoman in response to Mint’s queries.
“Quikr will now have to rely on cash in the bank (temporarily) to recover the lost money. So it will soon have to raise more money or find other sources to recover this…The scammed amount is likely to be written in the balance sheet because it’s classified as fraud under accounting terms,” said Aditya Jadhav, a chartered financial accountant and principal (Investments) at SIDBI Venture Capital Ltd.
Quikr has so far raised more than $440 million from investors such as Warburg Pincus, Tiger Global, Norwest Venture Partners, and Omidyar Networks among others. Quikr last raised ₹20 crore in debt funding from Trifecta Capital in July and is currently valued at a little over $1.5 billion.
This article was first published on livemint.com