BENGALURU: Flipkart has decided not to take up 40% of the office space in its new campus in Embassy tech village in Bengaluru even as the country’s biggest ecommerce company looks to cut costs and reduce losses, said multiple people aware of the matter.
Flipkart, which is undergoing a restructuring drive, will now take 1.2 million sq ft office space in the new campus as opposed to the earlier plan of occupying 2 million sq ft in two phases.
“Flipkart in a recent meeting with top executives of Embassy Group has communicated they do not want to go ahead with the entire 2 million sq ft. The meeting was attended by Flipkart cofounder and CEO Binny Bansal and CFO Sanjay Baweja, who recently quit the firm,” said a person aware of the development. Flipkart did not comment on the development.
In 2015, Flipkart had signed up for the 2 million sq ft custom-built office campus in Embassy Tech Village on the Outer Ring Road, owned by US private equity giant Blackstone and city-based builder Embassy, in the country’s single largest office leasing deal. It has now decided to cancel 800,000 sq ft that was to be taken up in the second phase. Embassy Group is expected to benefit from this as it can lease the same space at a higher rent of Rs.75 per sq ft a month. Flipkart had agreed to pay rental of Rs 50 per sq ft.
“There was a penalty clause and a lock-in period of five years if the company surrender the office space earlier. Embassy has however waived the penalty to maintain relationship with Flipkart,” said a second person aware of the development. The company has also cut corners in terms of fit-out costs. “Flipkart does not want to spend too much on real estate now. The company has reduced the fit-out cost to Rs 1,500 per sq ft from Rs 2,400 per sq ft,” said another person.
The new campus will be delivered to Flipkart by end of 2017 or early 2018 and can seat around 14,000 people once completed. The company is expected to move all its operation from multiple offices in Bengaluru to one location. It currently occupies 500,000 sq ft across the city.
Credits ET Realty