Dunzo, a startup that is facing a severe cash crunch, has informed its employees that it will be further delaying salary payments to the first week of October. This is due to the company’s inability to raise the capital it was expecting from investors. The startup was earlier scheduled to make payments on September 4, which was already an extension from its initial deadline of July 20. In an email sent to employees on August 30, Dunzo apologized for the delay and assured them that ensuring they receive their due compensation as early as possible is their top priority.
The company also stated that it will pay an interest on the dues, calculated at 12 percent per annum. This situation began on July 3, when Dunzo deferred salaries and capped pay packages at Rs 75,000 per month per employee, affecting over 500 employees. The company had assured employees that all dues would be cleared by July 20, a deadline that the startup missed. After missing the July deadline, Dunzo’s top management held a call with employees and assured them that the startup would clear all dues by September 4 and even pay employees an interest of 12 percent per annum on the portion of salaries that were held back.
However, it seems that the company has made no progress on raising capital from investors. In addition to this, Dunzo has also been slapped with legal notices from over seven companies and vendors that amount to over Rs 11 crore. In an attempt to cut costs, Dunzo has already undertaken three rounds of layoffs over the past year, eliminating over 500 jobs. Along with the job cuts, the company has also shut most of its dark stores and has been operating a marketplace model. As a result, Dunzo’s dark store count has reduced from 120 to just seven. Despite these challenges, Dunzo has raised close to $500 million since 2015 from investors such as Reliance, Google, Lightrock, Lightbox, Blume Ventures and several others.