Dunzo Delays Pending Salary Payouts, Ensures On-Time August Salaries
- ByStartupStory | August 31, 2023
Dunzo, a Bengaluru-based quick commerce and last-mile logistics firm, has communicated that it will once again delay the payment of pending salaries for its employees during June and July. In an email circulated to its workforce on Wednesday evening, the company confirmed that the full salary for August will be paid on September 4, 2023. In a previous commitment made in July, Dunzo had assured employees of a 12% annual interest on the withheld June and July salaries. The company stated that the interest and remaining dues will be settled soon, with the exact payment date to be announced the following week.
For those employees who resigned or were laid off by Dunzo from June 1, 2023, onwards, the company conveyed in a separate email that their outstanding salaries for June and July will be paid by the first week of October. This payment will include an additional month’s calculated 12% annual interest, and any other outstanding dues including the time served in August and September will be covered in the full and final settlement.
Sources familiar with the matter confirmed the reduction of approximately 150 employees across various departments such as sales, operations, and HR in July. These developments come against the backdrop of Dunzo’s struggles to secure new funding. Amid these financial challenges, the company limited salary payouts for June and July to Rs 75,000, affecting about 15%-20% of its workforce, mainly comprising leadership roles.
In its recent communication to employees, Dunzo expressed optimism about finalizing a new funding round. While media reports indicate ongoing discussions with existing investors for a new round amounting to around $20 million, disagreements over valuation have emerged as an issue. As of May 2022, Dunzo was valued at $757 million according to market research platform Tracxn. The company’s largest shareholders are Reliance Retail with nearly a 25.56% stake and Google holding 18.53% shares. In April 2023, Dunzo raised $75 million in convertible notes from returning investors Reliance and Google.
“We sincerely apologize for this delay. Ensuring that our team members receive their due compensation is a top priority for us and we are doing everything to make this happen. We have made positive progress on funding and we aim to close procedural requirements in September,” said the email.
It further added that the company will hold a town hall next week to address questions from employees and give updates on fundraise and other business developments.
Recently, a few of Dunzo’s partner dark stores, integral to its quick-commerce business Dunzo Daily, suspended operations due to unpaid salaries. Operations resumed after the company cleared pending salaries for off-roll workers. Dunzo Daily contributes to nearly 90% of the company’s revenues. The company has phased out its dark store network and is increasingly reliant on partner stores to fulfill quick-commerce orders. Amidst these dynamics, a new unicorn has emerged in the quick commerce sector, with Zepto raising $200 million in funding and becoming the first company in 2023 to surpass a $1 billion valuation. Swiggy’s Instamart is also focused on enhancing its profit metrics, with plans for a public offering in 2024.
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