Dunzo Resumes Dark Store Operations In Bengaluru

NCLT Pulls Up Cash-Strapped Dunzo For Failing To Reach Settlement With Creditors

SUMMARY

Dunzo resumed operations at seven dark stores in Bengaluru following the disbursement of July salaries to off-roll workers

These off-roll workers saw their July salaries delayed, eventually leading several workers not to return to work

Although workers are back to work now, many of them are on the lookout for other jobs

Troubled quick commerce startup Dunzo has restarted operations at its seven dark stores in Bengaluru following the disbursement of July salaries to off-roll workers.

Around 70 employees received the full payment for July on August 19, as per an ET report. While employees have returned to work, several are actively searching for alternative jobs due to uncertainties at Dunzo.

Earlier, these off-roll workers at Dunzo dark stores in Bengaluru saw their July salaries delayed, eventually leading several workers not to return to work. However, Dunzo said the service was down due to a shift from Dunzo-owned dark stores to partner stores in certain parts of Bengaluru.

“We are live in more than 95% of our geos in Bengaluru, except in a couple of areas where we are transitioning to partner stores over the long weekend. We should be operational in these areas as well within the next 24 hours,” a Dunzo spokesperson said last week when Dunzo was down in Bengaluru.

In the past few months, Dunzo has been closing dark stores across its operating cities as it reverts to its original operating model i.e. partnering with established stores for products, while the startup offers tech and logistics support under a revenue-sharing model.

Over the past few months, Dunzo has faced several challenges in raising fresh capital. It had planned to raise $75 Mn in convertible notes but could only raise about $45 Mn after it could not raise equity funding last year.

The company’s $100 Mn funding round has also hit a roadblock amid valuation markdown concerns raised by Reliance. Reliance Retail, which holds a 26% stake in Dunzo, is reportedly not ready to slash the startup’s valuation by up to 50% to raise a funding round being put together by existing shareholders.

Dunzo’s consolidated loss rose 2X to INR 464 Cr in the financial year 2021-22 (FY22) from INR 229 Cr in the prior fiscal year due to doubling of expenses, despite increased income from business. The startup saw its operating revenue increase 2.1X to INR 54.3 Cr in FY22 from INR 25.1 Cr in FY21.

Amid mounting losses and the changes in its business model, the startup also laid off around 30% of its workforce, or around 300 employees, in April this year.