Deloitte, a leading consulting firm that conducted a financial audit for Dunzo, a cash-strapped startup in FY23, has stated that the company’s viability as a ‘going concern’ primarily hinges on securing additional funding and enhancing operational performance.
In FY23, Dunzo, facing financial difficulties, reported a substantial loss of INR 1,800 crore, marking a significant 288 percent surge compared to the preceding year.
The term “going concern” in accounting refers to a company that possesses the necessary resources to generate sufficient revenue and remain operational in the foreseeable future.
“The group’s ability to continue as a going concern is significantly dependent on the availability of additional funding, and improvement in business operations. These events or conditions, along with other matters indicate that a material uncertainty exists that may cast significant doubt on the group’s ability to continue as a going concern,” Deloitte said in its report.
According to media reports, Dunzo has claimed that it has expanded its operations since the filing of Deloitte’s report.
“The audit report is from six months back and we’ve made significant developments since on business and funding. In FY23, our overall platform GMV crossed INR 1,500 crore representing the true scale of our business,” according to a company spokesperson.
“Our logistics/B2B vertical, which reached maturity, continued to be a strong revenue generator, growing by over 128 per cent while becoming GM neutral,” the spokesperson added.
Moneycontrol was the first to bring this development to light. Dunzo saw a remarkable increase in revenue from operations, surging 4.1 times to INR 226 crore in FY23 from INR 54 crore in FY22.
Dunzo incurred substantial losses during a period marked by the departure of numerous high-ranking executives, including co-founders and its finance head. Additionally, the company faced delays in employee salaries and implemented mass layoffs across various phases.