Indian grocery delivery services company, Dunzo is facing severe financial difficulties and will be implementing another round of layoffs, as revealed by the company’s co-founder and CTO, Mukund Jha, during an all-hands meeting on July 19.
This marks the third time the company has resorted to layoffs in the past seven months, driven by ongoing cash flow issues.
20% Of Dunzo’s Workforce To be Affected in Upcoming Layoffs
Senior employees estimate that around 20 percent of the company’s workforce, approximately 200 employees, will be affected by the upcoming layoffs. So far, Dunzo has already let go of 380 employees in two previous rounds of layoffs.
Jha mentioned that the company currently has a runway of about 18 months and approximately $40 million in its bank account. However, debt obligations prevent the startup from accessing these funds, exacerbating the financial challenges.
In an email sent to employees just hours before the all-hands meeting, Dunzo informed them about the delay in salary payments. Deferred salaries for June, as well as amounts due for July and August, will now be paid on September 4, significantly beyond the original deadline of July 20.
In June, Dunzo deferred salaries for about 50 percent of its workforce, roughly 500 employees, with the promise of clearing dues by July 20. Additionally, the company had imposed a salary cap of Rs 75,000 for June, irrespective of employees’ previous pay packages. Those below the threshold were to receive their full salaries.
Company Raised $75 million in April; Struggles Continue
Despite the challenging situation, the company urged employees to be patient and emphasized the need to focus on streamlining cash flow to ensure a more sustainable business in the future, requesting their support during this time.
Although Dunzo had raised $75 million in April, it continues to struggle, highlighting its high burn rate.
To address its financial woes, Dunzo has been adopting various measures. It is exploring sourcing products through a marketplace model, leading to the closure of over 50 percent of its dark stores and exiting unprofitable markets. Moreover, the company has increased delivery fees, introduced delivery delays, and implemented convenience fees to generate additional revenue from each order.
Since its inception in 2015, Dunzo has raised close to $500 million from investors like Reliance, Google, Lightrock, Lightbox, Blume Ventures, and others. Currently, Reliance holds the largest stake in the company at 25.8 percent, followed by Google with approximately 19 percent ownership, according to Tracxn data.
