Events such as Paytm’s failed IPO to Ola backtracking on its expansion plans by shutting down businesses and cutting jobs, raise concerns about India’s startup bubble finally bursting. Among Indian unicorns, Oyo Rooms was tied down by the pandemic, and lost Rs 76,000 crore every minute in FY20-21. While thousands were laid off and employee salaries as well as bonuses were slashed, the founder Ritesh Agarwal’s pay went up by 250 per cent.
Big raise ahead of IPO
The hotel chain, which had postponed its IPO earlier this year, is now ready to go public after resuming its growth trajectory. As it prepares for a stock market debut early in 2023, Agarwal’s salary has been hiked from Rs 1.6 crore last year to Rs 5.6 crore this year. While reducing bonuses and salaries meant a 27 per cent drop in employee expenses, stock option costs for employees increased from Rs 153 crore in the last fiscal to Rs 680 crore in FY22.
But the addition of ESOPs has only hiked spending on personnel by about 7 per cent for Oyo, which means that it saved a lot more. Its revenue from operations also saw a 21 per cent rise in FY22.
Posting losses since it was launched?
The company had been hit by a revenue loss of almost Rs 10,000 crore between 2020 and 2021. Ahead of Oyo’s first attempt to go public, India’s hotel and restaurant association had urged SEBI to stop the IPO as the startup has been posting losses ever since it was launched in 2013. It had also shut down a significant number of its co-working and co-living spaces, following the losses last year.
Oyo’s Japan unit also had to wind up its residential business, which failed to perform for two years. The company was also investigated for unfair trade practices, after other hotel chains were forcibly delisted by Make My Trip, when it entered an exclusive partnership with Oyo.
Throughout the years following the pandemic, Agarwal’s salary has consistently been hiked from Rs 21 lakh in FY20 to Rs 5.6 crore now.