Troubled quick commerce startup Dunzo has once more delayed the payment of overdue salaries for June and July, assuring employees that their wages will be credited in November.
According to The Economic Times, Dunzo’s Co-Founder and CEO, Kabeer Biswas, communicated to the employees about another delay in an internal meeting held on Friday (September 15th).
Insiders familiar with the situation informed the publication that Biswas cautioned meeting attendees about the possibility of additional layoffs if the startup’s cash flow situation continues to deteriorate. Nevertheless, he did not provide details regarding when or how many potential layoffs might occur.
Despite the challenges, the CEO of Dunzo assured the workforce that their September salaries would be paid on time, with the expectation of clearing them in the first week of October.
Biswas stated that the Reliance Retail-backed startup is now considering moving out of its current headquarters on Bengaluru’s Wind Tunnel Road as part of its efforts to reduce expenses even further.
This marks the fourth significant delay by the company in disbursing the outstanding payments owed to its employees. Over the past two months, there have been several instances where the company failed to meet the deadlines for salary disbursements.
The issue initially surfaced in July this year when SnackFax revealed that the company had delayed salary payments for 50% of its workforce and imposed a salary cap of INR 75,000 per month per employee. Following this, Dunzo assured its employees that the overdue salaries would be paid by September. However, last month, the company once more pushed back the deadline to the first week of October.
Faced with a severe funding crisis, the leading quick-commerce company proceeded to reduce its workforce by 30%, which equated to 300 employees, as it confronted increasing pressure from vendors demanding payment of outstanding dues. Reportedly, the company owes INR 11 crore to its suppliers and has received seven legal notices from them for non-payment of these dues.
In a recent update earlier this week, there were reports indicating that Dunzo was planning to settle the overdue salaries for the month of August using the services of the payroll financing app, OneTap. However, in response to employee concerns about potential financial liabilities associated with this process, it’s been reported that the company collected employee information and forwarded this data to OneTap.
Meanwhile, Dunzo has implemented a series of cost-cutting measures, such as the closure of the majority of its dark stores and a shift towards a marketplace model. Additionally, the company has been actively engaging with investors in an effort to secure additional funds as the crisis continues to unfold within the organization.
In late August, the most recent report indicated that the company was in advanced discussions to raise $100 million as part of its Series G funding round, which would involve a combination of equity and debt. This funding effort was expected to involve existing investors like Lightbox and Lightrock. Nevertheless, there has been no clear update on the situation since then.