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NEW DELHI: Coworking major WeWork India on Wednesday said its business will have no impact from the development in US-based WeWork Global, which has said “substantial doubt” exists about the company’s ability to continue as a going concern.
In WeWork India, Bengaluru-based real estate firm Embassy Group hold a 73 per cent stake, while WeWork Global has a 27 per cent shareholding. In June 2021, WeWork Global, which is a leading provider of flexible workspace, invested USD 100 million (about Rs 750 crore) in WeWork India.
While announcing its quarterly result, WeWork said, “…as a result of the company’s losses and projected cash needs, combined with increased member churn and current liquidity levels, substantial doubt exists about the company’s ability to continue as a going concern”.
WeWork Global has reported a net loss of USD 696 million in the first half of this year.
Reacting to the WeWork Global warning, WeWork India CEO Karan Virwani in a statement said, “Since inception, WeWork India has been backed by Embassy Group, which holds the majority stake and control to run and operate WeWork Global’s business in India. Any development globally has no impact on our business here”.
Despite the challenges brought on by the pandemic, he said WeWork India emerged profitable early last year. “We ended FY2022-23 with a revenue of Rs 1,400 crore and 250 crore in earnings”.
“We have built a strong network of local stakeholders, members, landlords and developers who are increasingly looking to partner with us. We are focused on growth with sustained profitability, and the fundamentals of our business remain strong. We are committed to the continued success of our members, and partners,” Virwani said.
At present, WeWork India has over 6.5 million square feet of area under its portfolio across 48 locations in the National Capital Region, Mumbai, Bengaluru, Pune and Hyderabad.
WeWork Global’s consolidated real estate portfolio consisted of 610 locations across 33 countries, which supported about 7,15,000 workstations and 5,12,000 physical memberships.
WeWork Global has said the “company’s ability to continue as a going concern is contingent upon successful execution of management’s plan to improve liquidity and profitability over the next 12 months”.
The plan included reducing rent and tenancy costs via restructuring actions and negotiation of more favourable lease terms, it said.
WeWork Global also aims to increase revenue by reducing member churn and increasing new sales, besides controlling expenses and limiting capital expenditures.
It also seeks additional capital via the issuance of debt or equity securities or asset sales.
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