SUMMARY
BYJU’s recently shut down its training and pre-sales departments, resulting in the resignation of hundreds of senior-level employees
Sources say that BYJU’S management is asking senior managers to resign to avoid paying severance packages as its funding taps run dry
The development has come close on the heels of three non-executive board members tendering their resignations
The poster child of India’s edtech industry, BYJU’S, seems to be reeling under many pressures that have enveloped it all at once. After thousands of associates and junior-level executives have been laid off from many departments since last month, Inc42 learnt from credible sources that senior-level employees, including senior managers, associate vice-presidents, and vice-presidents, are allegedly being asked to resign or face termination.
Sources privy to the matter said that BYJU’S shut down its training department two months ago, which led to the resignations of at least 100 senior-level employees. As per sources, the edtech has also cut the training period for junior-level employees. The training department engages thousands of executives across the country to support BYJU’S edtech business.
Associates were earlier provided with 1.5 months of training, which has allegedly been reduced to two weeks now.
“Salary packages of these associates have also been drastically reduced from INR 10 Lakh per annum (INR 8 Lakh fixed and INR 2 Lakh variable) to INR 7 to INR 5 Lakh and even lesser,” sources added.
In addition, the edtech giant has also scaled down its pre-sales division, with only 10% employees now running the show.
“However, the company after terminating the services of junior-level business development associates (BDAs) is forcing the senior managers to resign and not terminating them. This is being done to avoid paying them huge severance packages and ESOPs,” a source with knowledge of the matter said.
The source added that some senior managers have been retained, however, the ones that are being asked to resign are being handled ‘unprofessionally’.
Another source mentioned that recently BYJU’S shut one complete department at one of its loss-making businesses and laid off all junior-level employees.
“There is literally no work in the office. All the projects are shut. At this point, they just want to frustrate us mentally so that we tender our resignations,” a senior employee said.
BYJU’s meanwhile declined to comment when Inc42 sent a detailed questionnaire to the company on above queries.
No Cash To Run The Business?
According to our sources, the edtech decacorn’s survival is at stake. “Even the employees know of the current cash crunch and how desperately management has been chasing investors, but to no avail. Their edtech business is in shambles,” a senior-level employee said.
There are also concerns about the company’s FY22 losses, its rising expenses and the $1.2 Bn Term B loan default.
Sources said that there seems to be no near-term respite for BYJU’S when it comes to striking negotiations with the lenders in the US. Also, there are fears that the edtech giant may be slapped with higher interest rates.
Meanwhile, audit firm Deloitte Haskins & Sells has stepped down, with immediate effect, due to the delay in the company’s filing of financial results.
“The financial statements of the company for the year March 31, 2022, are long delayed… we have not received any communications on the resolution of the audit report modifications in the respect of the year ended March 31, 2022, the status of the audit readiness of the financial statements and the underlying books and records for the year ended March 31, 2022 and we have not been able to commence the audit as on date,” the auditor said in a statement.
After the resignation of its auditor Deloitte, BYJU’S announced the appointment of BDO (MSKA & Associates) as its statutory auditor.
“Under this appointment, BDO will cover the holding company — Think and Learn Pvt Ltd, its material subsidiaries Aakash Education Services Limited, and the overall group consolidated result,” the company said in an official statement.
The development has come close on the heels of three non-executive board members tendering their resignations. These members include GV Ravishankar, the MD of early-backer Peak XV Partners; Russell Dreisenstock of Prosus, and Chan Zuckerberg’s Vivian Wu.
BYJU’S has, however, denied the media reports on the resignations of the board members and said that any significant developments or changes within the organisation will be shared through official channels and announcements.
However, top sources informed Inc42 that there was discontent brewing over negotiations with the lenders, which led to the three board members calling it quits.
As per Inc42 layoff tracker, the startup has handed out pink slips to over 4,000 employees since last year, excluding the current layoffs. Not just that, it has also been marred by ballooning losses. Its net loss surged nearly 20X to INR 4,588 Cr in FY21 from INR 231.69 Cr in FY20.
Besides, the startup is once again late in filing its financial statements and is yet to release its financial numbers for FY22.
It has also come under fire for lax corporate governance guardrails and raids by the Enforcement Directorate on premises linked to it for allegedly flouting foreign exchange norms.
The company has also faced the ire of investors. Earlier this year, investor BlackRock slashed the valuation of the edtech juggernaut on its books by 62% to $8.3 Bn.
