Dunzo

In a bid to address its financial challenges, Dunzo, a quick-commerce player, is taking measures to clear its dues; however, the company is now faced with a severe cash crunch and the necessity to lay off employees. Recent developments have seen Dunzo receiving legal notices from Facebook India Online Services Private Limited (FBI) and Nilenso, a Bengaluru-based software consultancy firm, over non-payment of dues.

Google, being Dunzo’s second-largest backer, has also joined in by issuing its own legal notice, demanding payment of outstanding dues. While Dunzo has made partial payments to Facebook, it still owes the tech giant a significant sum of around Rs 1.5 crore. The legal notice stated that Dunzo acknowledged its liabilities and initiated payment, but the amount was insufficient to settle all outstanding balances.

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According to sources, the total demand notices for Dunzo would not exceed Rs 5-6 crore. Nilenso, on the other hand, which provides software engineers on a contract basis, is still owed approximately Rs 2.5 crore, even after receiving a partial payment of Rs 1 crore. There is an ongoing litigation between Nilenso and Dunzo under the Insolvency and Bankruptcy Code (IBC).

In an attempt to improve its financial health, Dunzo has resorted to laying off employees, making it the third round of layoffs in the last seven months. Senior employees estimate that about 20 percent of the company’s workforce, roughly 200 employees, will be affected. The company had previously deferred salaries for nearly 50 percent of its employees with the promise of clearing dues by July 20, which unfortunately did not materialize.

Due to the cash crunch, Dunzo had implemented salary caps, limiting all employees’ salaries to Rs 75,000 in June. However, the company assured those earning below the threshold that they would be paid in full. The situation has put immense pressure on the company as it tries to navigate its way through financial challenges.

Dunzo’s financial struggles are evident despite raising $75 million in April. The company has undertaken various measures to stay afloat, including sourcing products through a marketplace model and exiting unprofitable markets. Additionally, it has increased delivery fees, introduced convenience fees, and delayed deliveries to bolster revenue.

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Founded in 2015, Dunzo has raised close to $500 million from various investors, with Reliance being the largest shareholder with a 25.8 percent stake, followed by Google with approximately 19 percent ownership.

Despite the challenges it faces, Dunzo remains committed to building a sustainable business for the future. The company’s efforts to address its financial issues are ongoing, and it seeks support from employees and partners during this critical period.

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