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Amid Mass Layoffs, OYO Makes Fresh ESOP Allotments

Amid Mass Layoffs, OYO Makes Fresh ESOP Allotments

The allotment has been made at an issue price of INR 3.80 Lakh worth INR 15.22 Lakh

The company has also increased the ESOP pool

OYO is cutting its global headcount by 17% in the latest round of downsizing

Over the last two months of 2020, hospitality unicorn OYO Hotels and Homes has been in the limelight for its global restructuring leading to mass layoffs across the 80 countries it is present in. However, in a fresh wave, the company has made employee stock option (ESOP) allotments to a few employees.

According to the Ministry of Corporate Affairs filings accessed by Inc42, the company in a meeting on February 11, 2020, under its ESOP plan 2018 approved the allotment of 4 equity shares to the company’s welfare trust for ex-employee, Abhineet Sawa. The allotment has been made at a nominal value of INR 10 with an issue price of INR 3.80 Lakh worth INR 15.22 Lakh.

Further, the company in a meeting on February 17, 2020, increased the ESOP pool to 8720, from 6720 under the ESOP plan 2018, in light of the National Company Law Tribunal order when OYO demerged its businesses, under which 6720 shares were converted into Oravel Employee Welfare Trust.

Most recently, OYO founder and group CEO Ritesh Agarwal said that the global headcount in March would fall by about 17% from 30K in January after the layoffs. The company is also prioritising improved relations with hotels and stronger corporate governance, he added. “By the time our restructuring process is complete, OYO will have over 25,000 employees worldwide,” said Ritesh Agarwal. Of these OYO layoffs, the biggest impact is said to be in China after the business took a hit due to coronavirus outbreak.

OYO today operates in over 800 cities in 80 countries, including the US, Europe, UK, India, Middle East, Southeast Asia and Japan.  The portfolio combines fully operated real estate comprising more than 43,000 hotels with over 1 Mn rooms.

However, the last few years have been tough for OYO. Ranging from hotelier protests to now scrutiny by the Competition Commission of India (CCI) to path to profitability smeared with layoffs and restructuring, the company has several issues surrounding itself.

OYO parent Oravel Stays reported consolidated revenue of INR 6619.26 Cr in FY19, with expenses of INR 8946.8 Cr leading to a loss of INR 2332.7 Cr. In the Y-o-Y comparison, revenue has grown 3.5X, with 3.8X jump in expenses resulting in 5.47X higher losses.

OYO’s India operations earned INR 3749.13 Cr in FY19 with expenses of INR 4204.6 Cr leading to a loss of INR 455.5 Cr. In Y-o-Y comparison, the revenue has grown 1.84X, with 1.58X increase in expenses with a 46% increase in losses.