AskMe, a hyper local businesses-focused internet firm, has seen resignations from 650 people across its 40 offices in India. Most of the employees who were let go were in the annual salary bracket of Rs 2.5 lakh-Rs 6 lakh.
According to sources, the company, which is backed by Helion Venture Capital and Malaysia's Astro, is running out of funds. Reports earlier suggested that AskMe's monthly cash burn was more than $6 million.
When asked about the resignations, the company said: "It's the beginning of the new fiscal year and we continue to increase our productivity across functions through automation and better processes as in previous years. We continue to hire talent where required."
Several AskMe employees told Business Standard their annual appraisals were delayed this year. "We worked hard the entire year and we are let go without the pay we deserve," said an employee.
Some of the employees in Kolkata staged a protest. However, all they could get in return was a promise that their final pay would be released within a week.
Getit Infomedia (AskMe's parent company) has promised the employees they would be given a month's salary as severance payment. Some were told that they might get another job within the group or outside.
"Astro, which holds a majority share in the company, is seemingly no longer interested in funding Getit Infomedia," said an employee who survived the job cut. The employee said the last time Astro invested over Rs 150 crore in Getit, it had to jump through hoops but since then the group company has struggled to establish a foothold in the market. Helion has not shown any interest in doing a bridge round either. "The management has been shopping for other VCs but no one has shown any interest. More resignations may follow," an employee said.
Earlier, the company officials had told Business Standard, they were trying to raise $200 million from Chinese giants Alibaba and Baidu.
One of the reasons VCs have shown no interest is AskMe could be its foray into the grocery business, a source said.
AskMe grocery has a presence in 38 cities with 23 centres in Mumbai alone. It follows the Grofers-PepperTap business model of sourcing products from local retailers.
AskMe was in hot water recently when a furniture maker accused Mebelkart, a Getit Infomedia company, of defaulting on payment of Rs 28 lakh and selling brand imitations.
Established in 1986, Getit was a print-based classifieds company. Astro had made a significant investment in the company in 2010 and again in 2014. In 2013, Getit acquired AskMe from Network18. In 2015, it made two more purchases in the form of Bestatlowest and Mebelkart.