The pending salaries for both months will now be paid along with the August salary on September 4, the sources said.
Dunzo informed senior officials about the decision in a call earlier today. The company had earlier deferred paying June salaries to all employees earning above Rs 75,000. The previous deadline for the deferred payment of June salaries was July 20. The firm is now deferring the July salary by a month too.
“For those team members who were expecting the balance payouts of their June salary during this week, we regret to inform you that this has been delayed. The pending salaries for June will now be paid on September 4th, 2023. Additionally, the July salary for all team members will be paid only on September 4th along with the August salary,” the company said in an internal note that was seen by ET.
A Dunzo spokesperson declined to comment over email.
ETtech broke the story on Tuesday, saying Dunzo is seeking at least $20 million (about Rs 165 crore) more from Reliance Retail, its largest shareholder, after the cash-strapped quick commerce startup fell short of its target of raising $75 million by offering convertible notes, people aware of the discussions said.
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ETtechReliance Retail already owns a 25.8% stake in Dunzo, and that is expected to increase if the ongoing talks lead to the Mukesh Ambani-led conglomerate making an additional investment. Second largest shareholder Google was the only other investor besides Reliance to participate in the $75 million raise, while other Dunzo shareholders stayed away.
This has caused an adverse cash flow situation at the company with only $45 million of the overall target raised, as ET reported in April. Furthermore, Dunzo’s ability to raise capital from other existing and new investors would depend on how the company’s business stabilises and if it meets certain metrics after changing its business model.
The company had significantly scaled down the Dunzo Daily grocery quick-delivery services and laid off around 300 employees. Dunzo was said to be on an annualised revenue run-rate of about $300 million, till April, but this seems to have reduced significantly. It has capital to run operations for around 8-10 months, but is looking to cut costs relentlessly to increase its cash runway.
The firm has already shut down about 70% of its dark stores. Dunzo’s rivals in quick commerce include Swiggy Instamart, Zomato’s Blinkit, BigBasket’s BB Now and Mumbai-based upstart Zepto.
The focus has now shifted to the business-to-business unit, Dunzo Merchant Services (DMS). Reliance Retail’s JioMart ecommerce arm is the largest contributor to DMS, accounting for more than 40% of the business. It does more than 30,000 orders a day, mostly last-mile delivery services, in seven cities. Dunzo had plans to expand DMS’ operations to 15 cities but has now cancelled those.
DMS brings in roughly 35% of Dunzo’s revenues. It serves over 25,000 merchants, and about 65-70% of them are in the food space, including McDonald’s, Licious and Theobroma. Dunzo also has platforms for medicines, grocery, pet supply, meat and others. It charges a commission from merchants and a delivery fee from the platforms’ users.