Cash-strapped Dunzo continues to receive legal notices from its vendors asking the company to pay up dues, at a time when the startup is already struggling to keep its core operations afloat, people in the know told Moneycontrol.
In the past two weeks alone, Dunzo has deferred salaries due to employees, capped pay packages from June at Rs 75,000 per employee and even announced its third round of layoffs, measures it had to take to manage cashflows.
While the company assured employees that tough times would be behind it by September 4, matters do not seem to be getting easy for Dunzo, which has also received a legal notice from at least seven entities since March this year, people with direct knowledge of the developments told Moneycontrol.
They added that Dunzo had received legal notices from Google India, Nilenso, Clover Ventures, Facebook India Online Services Private Limited (FBI), Cupshup, Koo and Glance. In all, the outstanding dues to vendors total to about Rs 11.4 crore for Dunzo, which is nearly double of Rs 5-6 crore that was estimated earlier, Moneycontrol has learnt.
Dunzo, along with the seven other companies, did not respond to Moneycontrol's queries sent on July 24. The story will be updated if they reply.
Most recently, on July 19, Clover Ventures, an agritech startup which sells fruits and vegetables, demanded Dunzo to clear dues which have now totaled to over Rs 2 crore, as per the legal notice that Clover Ventures sent to Dunzo, a copy of which Moneycontrol has seen and reviewed.
Both Clover Ventures and Dunzo have raised debt from Alteria Capital.
Similarly, Cupshup, a company that helps in advertising, also sent a legal notice to Dunzo demanding that the quick-commerce company pay Rs 1 crore that it owes to Cupshup for the services offered.
“...My client would also prefer an amicable settlement over bitter litigation but my client is also apprehensive about the financial health of Dunzo as a going concern,” a legal team representing Cupshup, or Outlier Innovations Private Limited, said in a demand notice seen and reviewed by Moneycontrol.
The company also said it was willing to stall legal proceedings if Dunzo gave post-dated cheques and clears all dues by August 31, 2023. It however added that Dunzo has promised money on multiple occasions in the past but never made payments.
“The outstanding amount is substantial and owing to the delay in payments, my client has suffered severe financial hardships…My client is also responsible for the livelihood of its employees and hence cannot keep waiting for the payments,” Cupshup’s legal notice to Dunzo added.
Just like Clover and Cupshup, even Glance, the lock-screen platform, sent a notice which demanded Dunzo to pay Rs 58 lakh for the services that the Bengaluru-based company availed. Glance typically runs ads for companies on the lock screens of phones.
“...Please note the unless we are receipt of the amount due within the aforesaid period, we reserve the right to commence legal proceedings at your cost and peril to recover the debt without further notice to you and this notice may be tendered in court…as evidence of your failure to pay amount due,” Glance’s notice to Dunzo on April 11 read.
Moneycontrol has reviewed a copy of Glance’s notice.
Koo, the microblogging website, had subleased an office space from Dunzo and vacated the same earlier this year but has not received the refund of its security deposit of over Rs 62 lakh.
“...despite our client vacating and handing over the vacant possession of the demised premises to you on March 31, 2023, you have failed to refund the security deposit back after deducting certain amounts…and thereby breached the terms of the Agreement,” a legal team representing Koo said in a notice to Dunzo, which was also seen and reviewed by Moneycontrol.
The slew of legal notices comes after Moneycontrol had reported that Facebook India Online Services Private Limited ("FBI") and Nilenso, a software consultancy firm, based out of Bengaluru, had also sent Dunzo legal notices over non-payment of dues which totally amounted to around Rs 4 crore in total. Nilenso is owed the larger share.
Similarly, Google India, Dunzo’s second-largest investor after Reliance Retail, had sent Dunzo a legal notice which asked the startup to clear dues worth over Rs 3.1 crore to the tech giant for the various services provided.
While the amounts seemed small for Dunzo, which has raised close to $500 million so far, it is yet to make the payments. Further, if the dues are not cleared as per the deadline, an interest component will be added to the principal which will push up the total outstanding balance making repayment tougher for Dunzo.
“Google has made numerous requests to Dunzo Digital for payment of an outstanding principal balance due and owing Google in the amount of (Rs) 2,88,31,760.16. However, said amount remains unpaid,” a legal notice which the tech giant’s legal firm sent to the startup read.
Moneycontrol has reviewed a copy of the letter.
“Dunzo Digital presently owes Google that principal amount, plus interest/late fees to date in the amount of (Rs) 25,21,933.27 for the total amount owed of (Rs) 3,13,53,693.43, plus continuing interest/late fees…., please have your attorney contact us by the close of business on July 25, 2023,” the legal notice added.
Founded in 2014, Dunzo has so far raised close to $500 million from Reliance Retail, Google India, Lightrock, Lightbox, Blume Ventures and several other marquee investors. Reliance Retail is the largest shareholder with a 25.8 percent stake in the company, and Google is the second-largest with around 19 percent ownership in Dunzo, according to Tracxn, a private markets information provider.
Disclaimer: Moneycontrol is a part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.
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