WeWork India unaffected says CEO Karan Virwani as global co faces headwinds

WeWork India, the Indian arm of the global coworking and office solutions company, said it remains unaffected even as the New York-headquartered company raised "substantial doubt" on its ability to stay in business.

"WeWork India has been backed by the 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 (sic)," Karan Virwani, CEO of WeWork India, said in a statement.

He also noted that the company generated Rs 1,400 crore in revenue in FY23 and posted "earnings" of Rs 250 crore in the fiscal year.

"We have built a strong network of local stakeholders, members, landlords and developers who are increasingly looking to partner with us," Virwani asserted.

WeWork, which disclosed its financial results for April-June 2023 quarter and operates separately from its India arm, stated in a filing with the US Securities Exchange Commission (SEC), “Our losses and negative cash flows from operating activities raise substantial doubt about our ability to continue as a going concern.”

The SoftBank-backed office space leasing company reported a net loss of $696 million in the first half of this year. While the losses have decreased from the $1.4 billion it reported in the comparable year-ago period, its long-term debt stood at $2.9 billion as of June 30. The company's stock fell 24% in an extended rally on the New York Stock Exchange on Tuesday.

But while WeWork mulls sales and suspension of some operations in case of a sustained profitability and liquidity crunch, the Indian offshoot has been steadily scaling operations in the past few months and acquiring new properties in Delhi, Pune, and Hyderabad.

In June, the company secured a lease for 2.2 lakh square feet of office space in Bengaluru, where it plans to establish three new centres boasting a combined capacity of 3,600 desks. Similarly, in Hyderabad, WeWork India recently acquired over one lakh square feet of office space, creating room for 1,500 desks.

Notably, the company made its debut in Delhi this April, with a 54,000 sqft office space.

“Our dream is to have an India IPO story and continue to grow our top and bottom lines. Almost 20,000 desks year-on-year, which is over million-and-half square feet, in the foreseeable period is something we can easily do,” Virwani earlier told Shradha Sharma, Founder and CEO of YourStory, at TechSparks Mumbai in March this year.

Virwani noted that by restructuring and resizing operations, WeWork India ensured around 65% occupancy covered their operational costs. He revealed that its occupancy stood at 80-85%.

In October 2019, SoftBank infused $18.5 billion in WeWork Global, which was notably 'more than the GDP of Bolivia'. It shared $100 million with the Indian entity during the pandemic in June 2020.

WeWork India last raised Rs 550 crore from BPEA Credit in December 2022. The company also launched an ESOP surrender scheme for long-term employees to liquidate up to 25% of the stocks.