Dunzo Faces Financial Crisis, Struggles to Pay Salaries Amid Funding Woes
- ByStartupStory | December 8, 2023
Quick-commerce platform Dunzo is facing a financial crisis, failing to pay salaries for the month of November to its employees, according to industry sources. Despite tying up with OneTap, a revenue financing firm earlier this year, the company is struggling with a severe fund crunch and is seeking a fund raise of around $25-30 million. The fresh funding is expected to come at a much lower valuation.
Dunzo, which has raised close to s$500 million since 2015 from investors such as Reliance, Google, Lightrock, Lightbox, Blume Ventures, and others, is reportedly trying to manage operating expenses and has delayed salaries since July. The company has given up its office space to address cash flow issues, and several top executives, including two co-founders, have left. Legal notices from vendors for non-payment have further added to its challenges.
In November, Dunzo’s auditor Deloitte expressed doubt over the company’s ability to continue as a going concern, appending regulatory filings for FY23 that showed losses had surged by 288% to Rs 1,802 crore. Current liabilities exceeding current assets by Rs 325.8 crore, high operational costs, and a material uncertainty cast significant doubt on Dunzo’s ability to continue as a going concern, according to Deloitte.
The financial troubles have grown manifold, with FY23 expenses jumping four times to Rs 2,054 crore. Revenues during the year increased to Rs 226 crore from Rs 54 crore in FY22, marking a 320% increase but on a low base. Dunzo spent Rs 310 crore on advertising, a significant jump from Rs 64 crore in FY22. Despite marketing during the Indian Premier League, the expenses resulted in only a marginal increase in revenues. Employee benefit expenses surged to Rs 338 crore, up 144% from Rs 138 crore in FY22.
Dunzo is now seeking a fund infusion to manage salaries for the next couple of months until it closes the round of equity in January. The company’s challenges reflect broader concerns in the quick-commerce sector and its ability to sustain operations amid competitive dynamics and evolving market conditions.
Follow Startup Story
Related Posts
