FY20 was the year of a windfall for Dunzo in terms of receiving external capital from investors, it cornered more than Rs 463 crore in debt and equity funding. The Google-backed startup had raised a lot of eyebrows last year with its high cash burn in FY19. It had spent nearly Rs 169 crore to earn less than Rs 77 lakh of operating income in the year ending March 2019.
Things started looking up for the hyperlocal delivery startup during FY20.
The Kabeer Biswas-led company saw its revenue from operations grow 35X to Rs 27.5 crore during FY20 from making less than Rs 77 lakhs in FY19. Breaking down this number further, around 53.2% of this revenue was earned through commission charged from merchants on sales. Such collections shot up 21.4X to Rs 14.6 crore from only Rs 68.2 lakh earned in FY19.
Dunzo also introduced a tariff on the riders operating on its platform during the last fiscal and added another Rs 12.4 crore to its coffers through the same, making up 45.2% of the operating revenues. Advertising and warehousing revenue of Rs 43.3 lakh made up the rest 1.6% of the company’s revenue.
It’s worth noting that Dunzo had started a dark store model (read warehouse) to help local retailers fulfil customer orders quickly. It had opened over two dozen such stores across Bengaluru, Chennai, and Pune.
While the upsurge in revenues has come as a breather for Dunzo, the incessant rate of cash burn continues to be a big problem for the hyperlocal logistics platform. The company’s net cash outflow from operations swelled up 2.14X to Rs 330.8 crore in FY20 from the outflow of Rs 155 crore in FY19.
Expenses related to delivery rides including their contract fees and incentives accounted for the single largest share of the expenses for Dunzo, making up 32.4% of the total expenditure. Such expenses grew by 98.5% during FY20 to Rs 116.4 crore from Rs 58.64 crore spent on the same during FY19.
Employee benefit expenditure also grew by 73% to Rs 73.44 crore in FY20 from Rs 42.4 crore in FY19. Dunzo paid another Rs 16.9 crore to outsourced manpower to operate its warehouses and supply chain activities. These payments grew 3.8X from manpower costs of Rs 4.4 crore incurred during FY19.
Dunzo spent aggressively to promote its services on various media platforms to increase customer awareness and accelerate its scale. Expenditure on advertisement and promotion shot up 3X from Rs 26.5 crore in FY19 to Rs 77.1 crore during FY20.
Information technology expenses tripled for the platform during FY20 to Rs 28.4 crore from Rs 9.4 crore in FY19. Office rental expenditure also grew by 73% to Rs 5.6 crore in FY20.
Loss on cancellation of orders also stood out as a big hiccup for Dunzo as these costs accounted for 30.2% of the operating revenue. These costs jumped 4.4X to Rs 8.3 crore during FY20 from Rs 1.9 crore in FY19.
Another Rs 11.6 crores were spent on legal fees and taxes pushing the total expenditure to Rs 359.5 crore during FY20, growing by 113% from the expenditure of Rs 168.81 crore incurred in FY19. On a unit level, Dunzo spent Rs 13.09 to earn a single rupee in operating revenue during the fiscal ended in March 2020.
While the company’s EBITDA margins improved from -4695.45 % in FY19 to -1009.87%, these numbers are unsustainable for even an early growth stage venture let alone for one in the space for six years now. The forest fire of cash burn pushed Dunzo’s annual loss to Rs 338.4 crore in FY20, doubling from loss of Rs 168.9 crore in FY19.