Cash-Strapped Dunzo May Cut 200 Jobs After Deferring Employee Salaries

Cash-Strapped Dunzo Defers Payment Of Pending Salaries By Another 4 Months

SUMMARY

Cofounder and CTO Mukund Jha told employees that the number of layoffs would be decided this week

At a time when the startup has already deferred the salaries of its employees, the impending layoff round may impact 200 employees

In the past one year, this will be third round of layoffs at cash-starved Dunzo that is bogged down in mounting losses and a heavy capital burn

Quick commerce startup Dunzo is reportedly expected to undertake a new round of layoffs this week.

Sources privy to the development told Moneycontrol that the startup’s cofounder and chief technology officer (CTO) Mukund Jha informed employees about the decision during a meeting on July 19.

“We are definitely considering layoffs and the size will be decided either tomorrow (July 20) or (the) day after (July 21). Within this week we will communicate (the size of layoffs) to employees,” Jha said.

As per the report, this will be the third round of retrenchments at Dunzo, and will likely impact at least 20% of the startup’s workforce, or nearly 200 employees.

This came hours after the quick commerce startup told employees that it was deferring their salaries for the month of June to September. The company added that it would credit the salaries of the employees for July and August on September 4.

After reports emerged last week that Dunzo delayed salaries, the company said that it would credit the payments by July 20. It seems now that the company has breached the deadline amid cash flow issues at the company.

Hit by a cash crunch, the startup was previously forced to cap the salaries of many of its employees at flat INR 75,000 in June.

The new round of layoffs and cost-cutting measures have come at a time when, according to Jha, the company still has $40 Mn in the bank and 18 months of runway remaining. However, the startup cannot access those funds due to debt obligations.

Founded in 2015 by Kabeer Biswas, Dalvir Suri, Jha, and Ankur Aggarwal, Dunzo operates a hyperlocal delivery platform. Since its inception in 2015, the startup has raised $500 Mn from marquee names such as Reliance, Google, Lightrock, Lightbox, and Blume Ventures, among others.

After trying to raise $100 Mn in January, the startup could raise only $75 Mn fundraise from Reliance and Google via convertible notes by April. Notably, the startup has been marred by heavy losses and high burn rate, which has impacted its fortunes, especially the bottom line.

In a bid to curb its rising costs, the startup has been undertaking a slew of measures, including shutting down more than 50% of its dark stores, exiting unprofitable markets and increasing delivery fees. It also began levying convenience fees on customers to spur its earnings from each order.

The company also fired more than 300 employees in April this year to rationalise costs. It has also been planning to pivot from a dark store model to onboarding larger supermarkets and grocery stores on its platform on a revenue-sharing basis.

As the saga unfolds, it remains to be seen whether Dunzo is able to weather the ongoing headwinds.