Byju’s, the once high-flying, $22bn valued Indian edtech story, is finding it hard to make its way out of the financial and governance mess that it has embroiled itself in. Adding to those is the pressure to pay liabilities, a massive one of which is the ability to pay commercial rents for some of its high-cost offices across India. As a result, Byju’s has now announced a significant operational shift, mandating a ‘work from home’ arrangement for its entire workforce of 14,000 employees, alongside a significant downsizing of its physical office space. These measures come amidst reports of delayed salary payments and a larger struggle with cash flow. Its head office, with around 1000 employees, will continue to function.
Byju’s announced a work-from-home policy for roughly 14,000 employees, with the exception of staff working at its 300 physical tuition centers across India and HQ in Bangalore. Until informed otherwise, the work-from-home mandate has been implemented for an indefinite period of time.
If you have been following the media coverage, this move wouldn’t sound even one bit strange, considering the severe liquidity constraints plaguing the edtech giant, and the financial troubles accompanying it. Byju’s is already embroiled in an intense battle with investors over fundraising efforts, with recent negotiations failing to yield a resolution. This decision also coincides with troubling reports of delayed salary payments at the edtech decacorn. According to a report, a staggering 75% of Byju’s employees haven’t received their full salaries. This is a common issue for Byju’s – after all, the company had already delayed salary payments to employees in January and is yet to fully disburse the salaries of its 14000-strong workforce for February. According to Byju’s, it has disbursed part of salaries to all employees, which will reflect by today, March 11.
The company attributes this delay to the legal dispute with a small group of investors who are currently blocking access to funds raised through a recent rights issue – the deadlock has left the company hamstrung. The success of the restructuring of the efforts of Byju’s currently hinges on resolving the legal dispute with investors and securing access to the locked funds. These funds are critical for not only ensuring timely salary payments but also for fueling any future growth initiatives. Byju Raveendran, the founder and CEO of the edtech juggernaut, voiced the same in a prior communication to staff, speaking about the challenges posed by a dearth of capital.
“Unfortunately, a select few (four out of our 150-plus investors) have stooped to a heartless level, ensuring that we are unable to utilise the funds raised to pay your hard-earned salaries. At their behest, the amount raised through the rights issue is currently locked in a separate account,” Raveendran wrote. The fallout of the financial troubles is evident – at its height, Byju’s was valued at $22 billion in March 2022. As of January 2024, it is said to have dropped to $225 million.
Byju’s current situation can also be attributed to a liquidity crunch, a situation where the company faces difficulty meeting its short-term financial obligations and balancing operational sustainability against mounting financial pressures. The company’s current monthly revenue generation is estimated to be around ₹100 crore, a figure that may not be sufficient to sustain its past growth trajectory. The focus seems to have shifted towards online operations and a smaller network of high-performing tuition centers. Byju’s is looking to reduce its physical footprint and streamline its operations, a development that hints at the firm’s new-found focus on financial stability over rapid expansion.
Speaking more about the edtech major’s cost-cutting measures, the centerpiece of this plan involves vacating most of its office spaces across the country. The company has identified numerous offices and tuition centers, ranging between 500-1,000 square feet, in 17 different cities that are slated for closure. This downsizing effort signifies a strategic shift, with Byju’s aiming to consolidate its operations in the top 4-5 major cities in the country. Apart from this, Byju’s is already in hot waters with landlords over the non-payment of rent. Its financials for FY22 also reveal significant rental expenses that amount to nearly ₹10 crore per month. This new development also follows a trend of aggressive space reduction by Byju’s in Bengaluru, a major tech hub in India. The company has already vacated significant office space at IBC Knowledge Park, Kalyani Tech Park, and Prestige Tech Park. Negotiations are underway to potentially vacate even more space at IBC Knowledge Park.
