In the midst of its ongoing financial crisis, Mukesh Ambani backed Dunzo, the homegrown quick-grocery delivery provider, finds itself embroiled in yet another controversy with the abrupt exit of co-founder Dalvir Suri. Adding more to the crisis, speculations are doing round that its second co-founder Mukund Jha is also exiting the startup.
This latest development has raised concerns about the company's future as it grapples with delayed salaries and impending layoffs.
It's worth noting that Reliance Retail holds the largest stake in Dunzo, accounting for nearly 26% of the company's ownership.
Series of Departures From Dunzo Since August
Dunzo has witnessed a series of departures from its board of directors in the past two months.
The exodus began on August 3 when Ashwin Khasgiwala, the Group Chief of Business Operations at Reliance Retail, and Rajendra Kamath, the Finance Head at Reliance Retail, both resigned from Dunzo's board.
Exit of Co-Founder Dalvir Suri Adds to Dunzo's Woes
Dalvir Suri, a key figure in Dunzo's journey, announced his departure from the company, leaving behind a legacy of innovation and growth. Suri played a major role in the development of new lines of businesses such as Dunzo Merchant Services (DMS) and will be moving on from the first-of-its-kind startup.
CEO Kabeer Biswas expressed his gratitude for Suri's contributions, saying, "Dalvir has been instrumental in building out every new line of business at Dunzo. He has been the key zero to one person from the founding team that just gets things Dun."
Two Reliance Retail executives, a Lightrock partner and co-founders Dalvir Suri and Mukund Jha have left Dunzo's board of directors over the past two months.
Suri's exit from the company has already been announced, Jha might be out soon.
Dunzo's Financial Turmoil
Dunzo has been facing severe financial difficulties for several months, struggling to meet its payroll obligations and implement cost-cutting measures. Earlier this year, the company delayed the salaries of over half of its workforce until July 20, sparking concerns about its solvency. In a bid to weather the storm, the top management laid off 400 employees in the first half of the year, prompting rumours of potential liquidation.
Reliance Industries' Backing
Dunzo's situation is further complicated by its ties to Mukesh Ambani's Reliance Industries Ltd (RIL), which has invested significantly in the company. Reliance Retail, a subsidiary of RIL, is reportedly considering injecting an additional USD 30 million (Rs 249 crore) into Dunzo, increasing its stake to 25.8 percent. This move is seen as crucial in helping Dunzo navigate its financial crisis.
Despite its current challenges, Dunzo remains a significant player in the delivery sector. With its most recent funding round valuing the company at approximately USD 800 million (Rs 6660 crore), the injection of funds from Reliance Retail is expected to provide a lifeline, potentially rescuing Dunzo from its financial mess.
To date, Dunzo has successfully raised close to $500 million, with a substantial portion—around USD 300 million—being garnered since the beginning of 2022.
Dunzo’s Restructuring Plans
Dunzo is currently undergoing extensive organizational changes to stabilize its business operations. The company has not yet disclosed its financials for the fiscal year 2023, but in the previous fiscal year (FY22), it reported revenues of Rs 54.3 crore with losses amounting to Rs 464 crore.
Looming Layoffs and Office Space Relocation
As part of its restructuring strategy, Dunzo is reportedly set to lay off an additional 150-200 employees, marking a 30-40% reduction in its workforce. Affected employees have been informed that they will receive their full and final settlements in January.
Also, further reducing the costs, Dunzo is contemplating vacating its office space in Bengaluru. Co-founder and CEO Kabeer Biswas hinted at this move as part of their cost-cutting measures.
What Is the Dunzo Controversy All About?
The Dunzo controversy centers around the company's precarious financial situation, marked by delayed salaries, layoffs, and uncertainty about its future. The departure of co-founder Dalvir Suri adds to the challenges faced by this once-promising startup. However, the potential infusion of USD 30 million from Reliance Retail may provide the much-needed respite, allowing Dunzo to recover and continue its journey in the competitive delivery sector.
As Dunzo navigates through these turbulent waters, its ability to adapt, secure funding, and restructure effectively will determine whether it can regain its footing and reestablish itself as a formidable player in the delivery industry.
The company has reportedly informed impacted employees that they would receive their full and final settlements in January.
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