homestartup NewsFresh layoffs, legal notices and salaries deferred: Cash strapped Dunzo grapples for survival
Fresh layoffs, legal notices and salaries deferred: Cash-strapped Dunzo grapples for survival
It’s important to note that the development comes a day after CNBC-TV18 reported salary delays at the startup. Dunzo has further deferred the salary of its employees due from the month of June, until either late August or the first week of September, CNBC-TV18 had learnt from the sources.
Quick commerce platform Dunzo, which is facing a severe cash crunch, has begun a fresh round of layoffs which will affect 150-200 employees. An affected staff member told CNBC-TV18 on condition of anonymity that she received a call from senior management, informing that Dunzo would be letting go of certain employees as "the business is not doing well".
The employee further added that she needs to serve a two-month notice and her dues will only be cleared post that. This is the grocery delivery platform’s third round of layoffs within the last seven months, as the company faces mounting troubles when it comes to cash flow. Dunzo cut its workforce by 30 percent, meaning close to 300 employees were laid off in April in its second round of job cuts.
When CNBC-TV18 reached out to Dunzo, they refused to comment on the layoffs.
It’s important to note that the development comes a day after CNBC-TV18 reported salary delays at the startup. Dunzo has further deferred the salary of its employees due from the month of June, until either late August or the first week of September, CNBC-TV18 had learnt from the sources.
"The pending salaries for June will now be paid on September 4, 2023. Additionally, the July salary for all team members will be paid only on September 4th along with the August salary," according to an email Dunzo sent to its employees on Friday.
The earlier deadline set for the deferred payment which was 50 percent, had been July 20. Dunzo had deferred paying June salaries to employees earning Rs 75,000 per month, irrespective of what their pay package was.
CNBC-TV18 has also learnt that Dunzo has been served legal notice by tech giants Meta and Google. Facebook India Online Services Private Limited (FBI) and Nilenso, a software consultancy firm have served legal notice to Dunzo over non-payment of dues. Earlier, Google, which is the quick commerce startup’s second-largest backer, issued a legal notice, asking Dunzo to clear unpaid dues.
“Dunzo defaulted in making its payments to FBI under the Contract, despite repeated efforts, verbally and in writing, to rectify the delinquency, Dunzo acknowledged its liabilities and started making the payment to FBI. However, the payment was insufficient to settle all the outstanding balances under the account,” the legal notice read which was accessed by Moneycontrol.
“FBI appropriated another attempt by sending a follow-up email and making a few calls on the lookout for payment status or payment plan ("Plan”) for the entire outstanding. However, Dunzo failed to provide the plan, thus, the account remains suspended,” the notice further read, adding that Dunzo had agreed to pay FBI's dues within 30 days from the date of invoices raised by FBI.
Facebook and Google have not responded to CNBC-TV18’s queries, whereas Dunzo refused to issue a comment.
Dunzo has been struggling for a while now. Of the $75 million that it raised in April, only about $45 million has come through. The platform is now seeking to raise $20 million more from Reliance Retail, which is Dunzo’s largest shareholder.
The quick commerce player has even shut 70 percent of its dark stores and sources told CNBC-TV18 that Dunzo Daily has been permanently shut and it’s only the logistics and B2B arm of the company that’s sustaining at the moment.
Bengaluru-headquartered Dunzo reported a net loss of Rs 464 crore in FY22. This showcases a twofold spike from reporting a net loss of Rs 229.1 crore in FY21. According to the company’s annual financial reports, the rise in operational costs led to a spike in loss. Dunzo lost Rs 230 on each Dunzo Daily order during the first half of 2022 that is from January to June. EBITDA loss in June was Rs 176 crore. The company is yet to disclose its financials for FY23.
First Published: Jul 21, 2023 7:22 PM IST
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