Notorious B.I.G’s quote: ‘More money, more problems’ seems quite apt for the hyperlocal delivery startup Dunzo. The five-year-old firm has been raising capital via debt rounds in FY19 for sustaining cash guzzling business.
Similar to other venture capital-funded firms, Dunzo has lost a lot of money during FY19. However, the fact that the company lost 222X more money than it’s operating income is mind-boggling. The Google-backed firm has recorded a loss of Rs 169 crore in FY19 for a meagre revenue of Rs 76.6 lakhs.
According to Dunzo annual financial statement, it poured in total expenses amounting to Rs 172.45 crore in its business during FY19, but the revenues failed to catch up. If we compare revenue with expenses, it’s 225 times less than the total money spent by the company.
The hyper spending in search of the scale was not fruitful as the company losses shot up by 7.7X in FY19 as compared to the preceding fiscal. Importantly, the outstanding losses piled up to Rs 203.76 crore at the end of FY19.
During the same period, its revenue barely grew by 5X in the last fiscal as compared to Rs 15 lakh in operating revenues in FY18.
On expenses front, Dunzo shelled out three times more on employees’ benefits in FY19 which stood at Rs 42.34 as compared to Rs 12.92 crore in FY18. The cost of operations (mostly payments to delivery riders) grew 16 folds in the last fiscal to Rs 62.3 crore from Rs 3.82 crore in FY18.
Spending on business promotions also blew up 63X to Rs 26.5 crore in FY19. It incurred an expense of only Rs 42 lakhs on promotion and marketing in FY18.
Dunzo’s operational revenue, which mostly comprises of commission from merchant sales, was 3.6X less than the Rs 2.8 crore it earned by trading in mutual funds and from interest on deposits. It sold mutual funds amounting to Rs 90.37 crore during the last fiscal and generated a net cash inflow of Rs 95.6 crore through the issue of preference shares and debentures to fuel the expenditure.
These current liabilities included unpaid expenses such as outstanding salaries worth Rs 2.23 crore, statutory dues of Rs 1.5 crore. The biggest component was the outstanding runner payments of Rs 7.21 crore.
It’s worth noting that the Kabeer Biswas-led firm had a tough ride in raising follow-on capital in FY19. The firm kept raising several debt rounds from Alteria Capital. It recently managed to raise $45 million from Lightbox VC and existing investors, including Google.
The balance sheet of Dunzo isn’t impressive at all. The rift between the operating revenue and expense is staggering. The reason for the mindboggling loss is, of course, driven by popular philosophy: ‘Chase scale at any cost’. Dunzo’s financial health in the current fiscal is not going to improve drastically either as it’s fighting the deep-pocketed behemoth – Swiggy.
Besides Swiggy Stores, the Nasper-funded firm had launched parcel and documents moving service Go in Bengaluru. Entrackr had exclusively reported about Swiggy launching Go in March 2019.