Dunzo’s funding faces roadblocks: CEO urges employees with outstanding dues not to initiate legal steps

On May 3, co-founder and CEO Kabeer Biswas had reportedly told employees that the company was on the verge of closing a "transaction" with investors. This deal was expected to clear pending liabilities, including salaries, and statutory dues.

Reliance Retail-backed Dunzo’s efforts to secure funding and settle outstanding employee dues, is facing some roadblocks, according to the company’s internal communications reviewed by FE. The hyperlocal delivery startup, which has been facing financial challenges for months, informed its staff on Monday that it is facing difficulties in accessing promised funds.

In an email to employees, Dunzo’s payroll team stated, “We are facing some roadblocks in getting access to the funds. This was an unexpected turn of events at the last moment leading to further delay in getting funds”.

The recent setback follows a series of promises made by Dunzo’s management. On May 3, co-founder and CEO Kabeer Biswas had reportedly told employees that the company was on the verge of closing a “transaction” with investors. This deal was expected to clear pending liabilities, including salaries, and statutory dues.

In late May, the National Company Law Tribunal (NCLT) granted the company a two-week extension to settle dues with vendor Betterplace Safety Solutions.

In a July 12 communication, reviewed by FE, the company claimed to be “2-3 steps of paperwork away from closing” the transaction, with expectations to settle dues within 10-15 days. The email sent out to employees on Monday, however, indicates that these plans have not materialised as expected.

The latest update also shows that Dunzo is not currently holding any funds and is “exploring all possible alternate options” to address the situation. The company has urged employees to refrain from taking legal action, stating that such efforts would “just delay the ongoing process”.

An email seeking response of Dunzo went unanswered till the time of going to the press.

In FY23, Dunzo reported a loss of Rs 1,801 crore.