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Dunzo, an on-demand food and grocery delivery platform announced a company-wide restructuring to commence this quarter while Co-founder Dalvir Suri exits followed by another Co-founder and CTO Mukund Jha.
Source: (1)
Understanding the Roots of Dunzo’s Danger
In recent times, Dunzo has been struggling to locate funding and announced around three rounds of layoffs, along with delayed or decreased salaries of its employees and a 50% reduction in its dark storefronts, marking several headlines.
The company’s statement provided minimum information about the restructuring but it is said that Dunzo will provide its employees with specific settlements. It is also reported that three more board members joined the exit Ashwin Khasgiwala, Rajendra Kamath, and Vaidehi Ravindran, along with its above-mentioned two Co-founders.
Source: (2)
Suri joined the Bengaluru-based company in 2015 a year after its inception and later progressed to become the head of its B2B (Business-to-Business) unit of Dunzo Merchant Services (DMS).
CEO and Co-founder Kabeer Biswas had a few mentions to quote for Suri, stating his progressive contribution to the organization quoting the development of a new line of business under his leadership.
However, the company or any official from the company has not yet specified when Suri would be leaving but the recent news of another Co-founder Mukund Jha also exiting the firm, made sure all the exits are soon to occur.
Meanwhile, there are also reports surrounding that Dunzo is in advanced talks for finalizing a $25 million investment deal which would increase Reliance Retail’s 25.8% holding in the company.
Source: (3)
Mukund’s exit was also shocking for the company and everyone reading as the Co-founder and CTO of Dunzo became the second of the higher boards to leave at such tough bending times of the company, perplexing the crowd of what’s exactly happening internally.
The headlines with Mukund’s exit came in a day after we found out about Co-founder Dalvi’s exit. However, we are yet unaware of what Jha’s next step would be but according to reports he has stepped out of day-to-day operations and only awaits a formal announcement.
Although his departure has already been circulated among its workers the company has stated that Jha is an essential member of Dunzo, while the company gets restructured, Jha will have a crucial role in strategic development and leadership for the team guiding the company toward their future roadmap.
Officially, Jha left Dunzo’s board of directors on September 1, following his exit, Suri, Vaidehi, Rajendra, and Ashwin departed in August. Now only CEO Biswas, STIC Investments’ Hongjim Kim, and Lightbox’s Siddharth Talwar remain on the startup’s board.
It was noted that Jha, Suri, and Ankur Aggarwal (Co-founder) had no stake at Dunzo, and the three of them were only paid with salaries and ESOPs, just like every other average employee working at Dunzo.
On the other hand, Dunzo co-founder and CEO Kabeer Biswas holds 3.6% of Dunzo which makes him the only co-founder among the four to hold an internal share.
All the top of the hierarchy resignations came in when it was reported that Dunzo is looking to fundraise $25-30 million of finance to keep its operations running with Reliance Retail all set to increase its share in the company.
While the company is preparing to raise funds, it has drastically reduced all the costs by closing out its dark outlets and by laying off 500 people from the company. Jha who joined the food and grocery delivery platform in 2015, was instrumental in informing its employees about the layoffs and delays.
While doing so he convened multiple company-wide quarters and answered to the queries of its angry employees stating that the company did not raise funds sooner since the board wanted to safeguard the valuation.
Until now, Dunzo was seen as a profitable business and among the elites as the company raised $500 million in funding since 2015 from Reliance, Lightrock, Blume Ventures, Google, Lightbox, and several other investment leaders.
With Reliance being the largest stakeholder with a 25.8% stake in the company, Google holds the second-largest investment with a 19% stake in the company. Today, the company is going through a severe survival crisis and is asking for immediate funding.
Reports suggest that Dunzo can raise $30-35 million in new capital as its significant investors include Google, Reliance, Lightbox, etc., also it has raised $500 million to date. Dunzo has laid off 400 employees in three batches this year, and future lay-offs are sure to come sooner or later.
However, the company is yet to release its official financials for FY23 while it is noted that the income from operations increased to INR 54.3 crores in FY22 from INR 25.1 crore in FY21 and the company experienced a loss of INR 464 crore in FY22 up from INR 229 crore in the previous year.
Understanding Dunzo’s laid-off and salary delays reimbursement
It is bold and clearly noted that employees who left Dunzo are not liable to receive their full and final F&F pay until January or February of 2024.
However, the decision to postpone the employee salary came in after Dunzo started to look to raise $25-30 million in cash to clear all its outstanding debts.
It first started in June and July when the company withheld of portion of its employee salaries and initially promised that all dues to be cleared by July 20 after missing the given date, Dunzo declared a new deadline and again missed all of them.
Source: (4)
Dunzo stated that the company is working actively to ensure all the outstanding salaries are credited to all its employees as possible but due to the current economic crisis, it cannot justify the statements of its past of clearing the pending dues including the salaries of the month June, and July, and now announced a new deadline of January/February of 2024.
It is reported that Dunzo is still providing a 12% annual interest rate on the service period and has promised to pay the interest but has yet to follow any of its till now made promises.
However, all other pending salaries of its employees including August/September shall be paid out by January/February 2024 (for those yet in the company), another promise worth watching get fulfilled.
