Dunzo further delays employee salaries amid cash crunch, says report

Dunzo, a quick-commerce startup, has delayed paying salaries to staff as the company faces a severe cash crunch, said a report on Friday. Dunzo has delayed salaries to a number of employees, after having earlier promised to clear them by the end of August, reported Economic Times.

The company has attributed the salary delay to a cash crunch, which has been exacerbated by a valuation mismatch among stakeholders. Dunzo has been struggling to raise fresh funds, and is reportedly in the process of renegotiating its valuation with investors, the report added.

According to the report, Kabeer Biswas, the founder and CEO of Dunzo, said in an unplanned video call with employees on Friday that the pending August salaries would be paid next Tuesday or Wednesday.

Biswas said that the firm was able to clear August salaries for some employees following an injection of "some funds". However, payment was delayed for the remainder of the staff due to ‘procedural requirements’, sources told ET. He, however, did not provide a clear explanation about whether these funds constituted a new round of fundraising for the tech venture, the report added.

In spite of this ambiguity, the executive expressed hope about securing additional funding within the next few weeks. 

According to a Moneycontrol report, cash-strapped Dunzo is likely to vacate its office space in Bengaluru to save costs. The company's co-founder and CEO, Kabeer Biswas, told employees in a town hall on September 15 that the company is considering moving to a smaller office space.

Earlier, Business Today reported that the startup has further delayed the salaries of its employees. It is worth noting that the payment due to employees has been held back since July.

Dunzo had previously set a salary cap of Rs 75,000 for its employees and withheld the rest, promising payment at a later date. The company initially pledged to repay on July 20. They promised to pay all dues by August 30 after failing to do so.

The quick commerce start-up has been struggling due to a severe cash crunch. The company is expected to pay Rs 11 crore in dues to seven companies, who have all sent the quick commerce company legal notices due to delays in payment, Moneycontrol reported. To cut costs, the company has let go of 500 employees in the past year.

It is backed by Reliance, Google, Lightrock, Lightbox, Blume Ventures and several others. It was valued around $ 800 million in its last valuation round.

Moreover, Reliance is the largest shareholder with a 25.8 per cent stake in the quick commerce startup, followed by Google, which has a 19 per cent ownership in the company, as per data from Tracxn.

In the previous eight months, the company has let go of over 400 staff. Dunzo is also facing legal action from Google India, Koo, and Glance for outstanding vendor payments.

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