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As Snapdeal bled during 2016, it spent 200% more on salaries and bonuses

By Itika Sharma Punit

Indian e-commerce companies are struggling but won’t reduce the hefty salaries they pay their employees.

During fiscal 2016, Softbank-backed Snapdeal’s payout under the “salaries, wages and bonus” head rose 210% year-on-year to Rs673.4 crore ($101 million), a regulatory filing sourced by data platform Tofler shows. In that period, the company was losing nearly Rs8.1 crore a day on average, adding up to Rs2,960 crore ($435.7 million) annually—up 124%.

Snapdeal declined to provide specific answers to a detailed questionnaire seeking the break-up of this payout and reason for such a sharp increase.

“In FY (fiscal) 2016, we invested our capital in building our capabilities across technology, logistics, and seller ecosystem to support the long-term growth of our business,” the Noida-based company told Quartz in a statement.

The company’s revenue rose 56% during the year ended March 1, 2016, to Rs1,456.6 crore.

Besides salaries and bonuses, Snapdeal’s spending on overall employee benefits increased nearly 150% year-on-year in fiscal 2016 to Rs911.1 crore, a filing made to the registrar of companies (RoC) showed. The total employee benefit expenses include salary, wages, bonus, contribution towards provident fund, gratuity expense, employee stock options, founder’s stock options, and staff welfare expenses.

For several years now, internet startups have been paying higher salaries than traditional IT businesses in order to attract talent. This is because jobs at startups are deemed high risk as most of them are far from being proven stable or ready for a long-run.

Snapdeal is certainly not the only internet company splurging on employees.

In fiscal 2016, Snapdeal’s rival, Flipkart, paid over Rs10 crore ($1.5 million) each to six of its employees and over a crore each to 101 others, according to an RoC filing. These compensations alone take Flipkart’s remuneration bill to around Rs300 crore.

Later, the Bengaluru-based company explained in a statement that the ”remuneration figures cited include a significant portion of liquidated ESOPs (employee stock options) that had been accumulated over the years.”