BYJU’S, the prominent edtech company in India, is reportedly facing a multitude of challenges simultaneously. Following the layoffs of thousands of associates and junior-level executives across various departments in recent months, senior-level employees, including senior managers, associate vice-presidents, and vice-presidents, are allegedly being asked to resign or face termination, according to reliable sources.
Two months ago, BYJU’S closed down its training department, resulting in the resignation of at least 100 senior-level employees. Additionally, the training period for junior-level employees has been shortened. Previously, associates received 1.5 months of training, but it has allegedly been reduced to just two weeks. Furthermore, salary packages for these associates have been significantly reduced, from INR 10 lakh per annum to INR 7-5 lakh or even less.
The company has also downscaled its pre-sales division, with only 10% of the employees remaining in that department. However, rather than terminating the services of senior managers, BYJU’S is reportedly pressuring them to resign in an attempt to avoid paying hefty severance packages and employee stock ownership plans (ESOPs). Sources reveal that some senior managers have been retained, but the ones asked to resign are being treated unprofessionally.
The current situation indicates that BYJU’S is facing financial difficulties. Employees are aware of the cash crunch and management’s desperate pursuit of investors, which has been unsuccessful so far. Concerns arise regarding the company’s losses in FY22, rising expenses, and the default on a $1.2 billion Term B loan.
Negotiations with lenders in the US do not seem to offer immediate respite for BYJU’S. Moreover, there are concerns about potential higher interest rates being imposed on the edtech giant. Adding to the company’s woes, audit firm Deloitte Haskins & Sells has resigned due to the delay in filing financial results.
After Deloitte’s resignation, BYJU’S announced the appointment of BDO (MSKA & Associates) as its new statutory auditor. Meanwhile, three non-executive board members have recently resigned, hinting at discontent over negotiations with lenders.
BYJU’S has denied media reports about the board members’ resignations and stated that any significant developments or changes within the organization will be officially communicated. However, insiders claim that the board members’ departures were a result of disagreements during negotiations with lenders.
According to Inc42’s layoff tracker, BYJU’S has already laid off over 4,000 employees since last year, excluding the recent layoffs. The company has also witnessed substantial losses, with its net loss increasing nearly 20 times from INR 231.69 crore in FY20 to INR 4,588 crore in FY21.
Furthermore, BYJU’S has faced scrutiny for lax corporate governance practices and raids by the Enforcement Directorate related to alleged violations of foreign exchange norms. Investors have also expressed concerns, with BlackRock reducing the company’s valuation on its books by 62% to $8.3 billion earlier this year.
As of now, BYJU’S is yet to release its financial statements for FY22 and faces numerous challenges that may impact its future operations and growth.
