Dunzo caps salaries at Rs 75,000 for June, promises to clear dues by July 20

Dunzo is based in Bengaluru and competes with Swiggy Instamart, Zepto, Blinkit and BigBasket

Dunzo, the quick-commerce player that is faced with a severe cash crunch, had capped the monthly salary of employees at Rs 75,000 in June, people in the know told Moneycontrol. This essentially meant that no one would get more than the fixed amount, even if they have a higher package. It also ensured that everyone earning less than the amount would get their salary in full.

Earlier this week, Moneycontrol reported that the startup was deferring June salaries for around 500 staffers, or about 50 percent of its workforce. The company’s top management, including co-founder and CEO Kabeer Biswas, assured employees that salaries were being capped only for June and that Dunzo will be clearing all dues by July 20.

The salary deferrals may have impacted senior employees at Dunzo the most. Moneycontrol has learnt that around 60-65 percent of all workers were paid in full and 35-40 percent of them had only received a part, or Rs 75,000, as their June salary.

“We were informed about our salary caps and the deferrals only on the day we were supposed to be receiving our salaries – there was no prior intimation,” one of the employees cited above told Moneycontrol on the condition of anonymity.

The holdback of salaries comes despite Dunzo raising $75 million in April this year, underscoring the company’s high cash burn rate.

“The company was fighting till the very last day to make sure all salaries are paid but there was a business need that required immediate attention and that’s likely why employees were informed at the very last minute,” another person aware of the company’s plans told Moneycontrol.

A spokesperson for Dunzo did not comment on Moneycontrol’s queries.

These recent moves could potentially lead to more layoffs and voluntary exits at the Bengaluru-based startup, which has already fired around 380 employees across two rounds of layoffs so far this year.

However, cost cuts at Dunzo are not new. As the company increases its focus on sourcing products through a marketplace model, instead of fully relying on its network of dark stores, it has reportedly shut at least 50 percent of its dark stores and exited other unprofitable markets.

The company also begun charging higher delivery fees, started delaying deliveries and is also levying convenience fees on users as it looks to earn more money per order and put itself on a path to profitability.

In a recent interview to Moneycontrol, Swiggy's food delivery CEO, Rohit Kapoor said there was consolidation underway in the quick-commerce space and that there will be only 3-4 significant players who remain in the space.

Swiggy's Instamart, Y Combinator-backed Zepto, Zomato's Blinkit, Tata-operated BigBasket and Dunzo are currently the five players in the space.

Founded in 2015, Dunzo has so far raised close to $500 million since 2015 from Reliance, Google, Lightrock, Lightbox, Blume Ventures and several others. Reliance is the largest shareholder with a 25.8 percent stake in the company, and Google was the second-largest with around 19 percent ownership in Dunzo, according to Tracxn.

Disclaimer: Moneycontrol is a part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.