Google-backed delivery startup, Dunzo, plans to settle outstanding payments to former employees by 30 March. This decision comes after a challenging year marked by profitability issues and a liquidity crunch, as conveyed 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,” stated the email.
The acknowledgment comes amidst financial troubles faced by Dunzo, including the inability to disburse November salaries and the implementation of layoffs affecting more than 30% of its workforce as part of cost-reduction initiatives. The Bengaluru-based startup has deferred payments to its laid-off staff, creditors, and vendors.
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“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 cover this development. The company did not reply to the request for comment.
Over the past year, the company has implemented various cost-saving measures. This includes transitioning all employee accounts from Google to Zoho workspace, resulting in a cost reduction of at least a third. Furthermore, the company has vacated its Bengaluru office and closed a significant portion of its dark stores.
Additionally, the company experienced high-profile departures of key executives, including co-founders and its finance head. In a regulatory filing, the company’s auditor, Deloitte, expressed skepticism about the company’s ability to continue as a going concern following the disclosure of increased losses.
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Dunzo, which was on its way to achieving unicorn status with a valuation of a billion dollars in 2022, reported a substantial net loss of INR 1,802 crore in FY23. As of January 2022, it was valued at over $775 million.
The quick commerce industry is highly competitive, currently dominated by five major players. Instamart, supported by Swiggy, BBNow from BigBasket, Blinkit and Zepto, both backed by Zomato, are actively pursuing avenues to achieve profitability. These players are focused on enhancing dark store efficiencies to optimize margins.
Founded in 2014 by Kabeer Biswas along with Ankur Aggarwal, Dalvir Suri, and Mukund Jha, Dunzo’s investors include Reliance Retail Ventures, Lightbox Ventures, and Blume Ventures, among others.