Dunzo, the online quick commerce platform, is in talks with its largest shareholder, Reliance Retail, to raise an additional $20 million (about Rs 165 crore) in funding. This move comes after the company reportedly fell short of its $75 million funding target in April.

Reliance Retail acquired 25.8% of Dunzo’s shares in January 2022 through a $240 million investment, while Google holds just under 20% of the shares. If the ongoing discussions are successful, Reliance Retail’s ownership in the startup is expected to increase as they consider making an additional investment.

The talks for additional funding come amidst a series of layoffs and reported salary deferrals by the company. In January, Dunzo laid off around 80 employees, accounting for 3% of its workforce, and reduced its dark store count by 50% in an effort to improve profitability. In April, the company raised $75 million through convertible notes and laid off around 300 employees, constituting approximately 30% of its staff. At the time, CEO Kabeer Biswas stated that the delivery platform was looking to revamp its business model.

Dunzo has since shifted its focus to the business-to-business (B2B) unit, Dunzo Merchant Services (DMS), where Reliance Retail’s JioMart e-commerce arm plays a significant role. The company aims to achieve profitability through the B2B segment, which requires less capital compared to Dunzo Daily.

DMS currently handles over 30,000 orders per day, primarily offering last-mile delivery services in seven cities. While there were initial plans to expand DMS to 15 cities, those plans have now been canceled. DMS contributes around 35% of Dunzo’s revenues and serves over 25,000 merchants, with a majority of them in the food industry.

Dunzo operates platforms for various categories, including medicines, groceries, pet supplies, and meat, generating revenue through commissions from merchants and delivery fees from platform users.

As of now, Dunzo has approximately 1,000 employees. Recent reports indicate that the company has deferred the June salary of around 500 employees, representing half of its staff, with the salaries of those earning above Rs 75,000 experiencing delays. The situation highlights the challenges the company is facing in its quest for financial stability and growth.