Dunzo, the fast-paced commerce company facing a severe financial crisis, recently notified its senior employees on July 19 that the remaining portion of their salary, originally due in June, will be postponed until September 4.
This represents a significant delay from the previous deadline of July 20.
Dunzo Facing Financial Crisis: Salaries Not Paid, Cap on Salaries Imposed
The company had already deferred the June salaries for approximately 500 employees, which accounts for 50 percent of its entire workforce. Initially, it promised to clear all dues by July 20, but due to ongoing discussions with investors to secure additional funding and address cash flow challenges, this deadline has been pushed back.
To improve its financial situation, Dunzo has also imposed a cap on employee salaries, limiting them to Rs 75,000 per month, regardless of their previous pay package.
The company’s payroll team sent an email to the affected employees, expressing regret for the delay and explaining that the pending June salaries would now be paid on September 4, 2023. Furthermore, the July salaries for all team members would also be disbursed on the same date, along with the August salary.
Dunzo acknowledges the difficulty this situation poses for its employees and requests their patience and support. The company emphasizes the importance of focusing on streamlining cash flow to establish a more sustainable business for the future.
Financial Crisis To Result in Job Cuts?
As per reports, these recent developments might lead to more job cuts and voluntary exits at the Bengaluru-based startup. Earlier this year, the company had already terminated around 380 employees in two rounds of layoffs.
Despite raising $75 million in April, Dunzo continues to experience high cash burn rate, leading to the holdback of salaries.
In an effort to reduce costs, Dunzo has made previous attempts to shift its business model, placing a stronger emphasis on sourcing products through a marketplace model instead of relying solely on its network of dark stores. Consequently, it has closed down at least 50 percent of its dark stores and exited other unprofitable markets while bolstering its hyperlocal delivery vertical.
Since its inception in 2015, Dunzo has raised close to $500 million from various investors, with Reliance holding the largest stake at 25.8 percent, and Google being the second-largest shareholder with approximately 19 percent ownership, according to Tracxn data.
