Ahemdabad based fintech startup Lending Kart recently laid off 30 per cent of its 675 member workforce, as digital lending startups report a sharp decline in business due to the COVID-19 induced lockdown. The move is expected to impact 200 or more employees of the company.
LendingKart is a non-deposit taking NBFC, providing SME lending in India. The Company aims to transform small business lending by making it convenient for SMEs to access credit easily.
“The outbreak of COVID-19 and the resultant slowdown has had a tremendous impact on the economy. This period has had a debilitating effect on the MSME sector where everything has come to a virtual standstill. NBFCs have been significantly impacted, with loan disbursements coming to a halt and moratorium impacting collections. We have been compelled to take some measures to rationalise our employee base across offices to ensure long term sustainable business," said Lendingkart in an internal email response to its employees and in email responses to the ET and Mint queries.
Earlier this week, the company said it had raised Rs 319 crore as part of its Series D round, in which existing investors including Fullerton Financial Holdings, Bertelsmann India Investments, Sistema Asia Fund and India Quotient had participated. The Ahmedabad-based startup’s estimated market capitalized valuation has reached to around ₹1860 crore ($248 million). The move just came a few days after this.
The company also said that these layoffs were a part of its annual appraisal cycle. A spokesperson said, “We have been compelled to take some measures to rationalise our employee base across offices to ensure long term sustainable business.” The company added, “This exercise is an extension of our annual appraisal cycle, wherein we rationalize the team by about 15-20 per cent basis performance. This year, additional right sizing has been undertaken to account for the business volumes that we anticipate in this financial year. The management and leadership team have taken significant pay-cuts."
In addition to this, Lendingkart also said that the impacted employees will be on the company payrolls for the next 3-5 months, with insurance and medical insurance being provided to them for this period.
LendingKart has now joined Food-tech majors Swiggy, Zomato and travel and hospitality firms such as Treebo, Fab, MakeMyTrip and TravelTriangle who have fired a significant chunk of their workforce.
Recently, ride-hailing cab services Ola and Uber have also laid off 2000 employees collectively while Livspace and Sharechat have cut 15 per cent and 25 per cent of its total employee headcount respectively.