Despite reporting massive losses in two subsequent financial years, e-commerce company Flipkart handed out huge payouts to its top employees. According to a report on QZ.Com, the top six employees of the company were paid over Rs 10 crore in April 2015 to March 2016. As per the company’s filing with the Registrar of Companies, Flipkart had reported a loss of Rs 1,096 crore in 2015 which doubled to touch Rs 2,306 crore in the year ending March 2016.
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In a bid to attract costumers in the highly competitive online space, the company had been on a sales and marketing overdrive in the last two years, offering heavy discounts to customers. This seems to have taken a huge toll on the company finances. During the year 2016, Flipkart was under stress to make sales profitable and reduce its cash burn.
But the company’s salaries to its top employees, as reported by QZ.Com, do not give out the extent of financial losses the company has been accumulating over the last two years. “These remunerations include salary, allowances, leave travel allowances, company’s contribution to provident fund, superannuation fund, and gratuity fund, among other things, according to the filing made by Flipkart to the Registrar of Companies (RoC),” the report said.
Among the top paying employees, the 36-year-old chief people officer Mekin Maheshwari gets a remuneration of Rs 35.3 crore. Meanwhile, Flipkart clarified that “the remuneration figures cited include a significant portion of liquidated ESOPs that had been accumulated over the years.”
In the financial year 2014-15, Flipkart and other big online retailers like Snapdeal and Amazon India reported a collective loss of Rs 5,000 crore. At a time when a company incurs losses, cut in paychecks to employees can be one of the options to stop the slide in finances. But Flipkart seems to be far from even considering this option. And this may just hurt their investors’ confidence.