Cash-strapped Dunzo promises to pay former staff by March-end
- Dunzo had delayed salaries in November and laid of more than 30% of its workforce as part of cost-reduction efforts
Bengaluru: Google-backed Dunzo plans to settle outstanding payments to former employees by 30 March, following a challenging year marked by profitability issues and a liquidity crunch, the quick commerce startup said in an email to its staff this week.
"We confirm that we are on course to clear the dues by 30 March 2024. We acknowledge that we were not able to keep our committed timeline in the past; however, we assure you that there will not be any further delay," the mail, seen by Mint, said.
The acknowledgment comes in the wake of financial issues faced by Dunzo, including an inability to disburse salaries in November and layoffs of more than 30% of its workforce as part of cost-reduction efforts. The Bengaluru-based startup has deferred payments to its laid-off staff, creditors, and vendors.
"We are confident in meeting this timeline based on the progress we have made in the funding process, and we will ensure that we keep our commitment," the company said in the memo. "We completely understand that dues have not been settled in the ideal time, and this delay must have been exhausting for you emotionally and financially."
Yourstory was the first to report this development. The company did not immediately respond to Mint's request for comment.
Over the last year, the company has taken various measures to keep a tight lid on its costs, including migrating all its employee accounts to Zoho workspace from Google, bringing down costs by at least a third, vacating its Bengaluru office as well, and closing a significant portion of its dark stores.
It also witnessed top-level exits of executives including co-founders and its finance head. The company's auditor Deloitte, during the regulatory filing, had cast doubt on the company being a going concern after it reported wider losses.
Dunzo, which was on its path to becoming a unicorn, or a company with a valuation of over a billion dollars in 2022, reported a substantial net loss of ₹1,802 crore in FY23. As of January 2022, it was valued at about $775 million.
The quick commerce business is a hyper-competitive sector and is largely a five-horse race at the moment. Swiggy-backed Instamart, BigBasket’s BBNow, Zomato-backed Blinkit and Zepto are the other major players in this sector which are eyeing a path to profitability. They are trying to optimize dark store efficiencies to improve margins.
Founded in 2014 by Kabeer Biswas along with Ankur Aggarwal, Dalvir Suri and Mukund Jha, the company's investors include Reliance Retail Ventures, Lightbox Ventures and Blume Ventures among others.
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First Published:2 Feb 2024, 04:28 PM IST
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