SUMMARY
BYJU’S has been sending notices for termination of lease contracts for its tuition centres, and this move is likely to result in it shutting 120 centres
In the termination notice, accessed by Inc42, BYJU’S parent Think & Learn attributed the decision to changing business priorities
The embattled edtech firm is planning to close a majority of these tuition centres by August 31
In yet another cost-cutting exercise, beleaguered edtech giant BYJU’S
is likely to shut nearly half of its 250 BYJU’S Tuition Centre (BJC).
In a bid to control its expenses amid the ongoing cash crunch and legal troubles, the company has started sending notices to the head of its tuition centres for terminating lease contracts of the centres. The move is likely to result in it shutting 120 offline centres, sources told Inc42.
BYJU’S parent, Think & Learn Pvt Ltd, has sent termination notices for tuition centres in Mohali, Lucknow, Meerut, Ghaziabad, Indore, Ranchi, among others, over the last few days, the sources said.
The edtech startup started sending the notices from July 31 and a majority of these tuition centres will be shut by August 31, they added.
“Everyday two to three centres are being shut by BYJU’S now and this is going to impact more than half of the operational tuition centres,” one of the sources said.
Inc42 also accessed some of the notices sent for the termination of lease contracts. In the notices, Think & Learn attributed the move to changing business priorities.
Queries sent to BYJU’S on the above developments didn’t elicit any response till the time of publishing this story.
The latest development comes nearly a month after Inc42 exclusively reported that BYJU’S was locked out of over 100 tuition centres across the country over non-payment of rent, electricity dues, water bills, among others.
Why Tuition Centres Failed To Live Up To The Hype?
The edtech firm launched BYJU’S Tuition Centre business with much bullishness in February 2022. At that time, the company claimed it would invest $200 Mn to expand this vertical.
Amid the slowdown in the edtech business post the Covid-19 pandemic, offline centres were expected to bring in additional revenue for edtech startups. Over the last couple of years, offline or hybrid learning became the lifeline for edtech startups, including Unacademy, Vedantu and PhysicsWallah. All of these companies opened offline centres for test prep and K-12 learning with much fanfare during this period.
However, for BYJU’S, the offline bet seems to have failed to bring in the expected results. Despite the company slashing the tuition fees for the tuition centres, rising costs and high teacher-student attrition seems to have made the business unviable.
The BYJU’S of a few years ago would likely have been able to tide over this situation by pumping in more cash. However, the firm is currently a pale shadow of itself. A severe cash crunch, layoffs, multiple insolvency pleas, and other legal cases have left the company in a bad state.
Despite settlement of dues of a few operational creditors and the Board of Control for Cricket in India (BCCI), BYJU’S is involved in a legal battle with its US-based lenders over the payment of a $1.2 Bn Term B loan.
While the National Company Law Appellate Tribunal (NCLAT) set aside the insolvency proceedings against BYJU’S after it reached an agreement with the BCCI, the Supreme Court on Wednesday (August 14) quashed the Appellate Tribunal’s order and revived bankruptcy proceedings.
Employees Paying The Price
BYJU’S has cut its workforce by about 90% over the last two years. However, the edtech firm has still not cleared the pending salaries and other dues of many of its former employees. Besides, the employees currently working with the startup have also not been paid their salaries for the last few months.
Nearly a dozen current and former BYJU’S employees Inc42 spoke to said that the company’s human resource (HR) department is expressing its inability to clear the dues amid mounting debt.
The company’s revenue collections on sale of tablets, online tutoring and offline business is falling.
“Many employees who have been keeping the operations alive, including those at the senior positions, have been paid only half of their salaries since February this year. That too was stopped from May onwards and the management kept communicating that as soon as they will have access to the funds via the rights issue, the dues will be paid. However the management is incommunicado now and people are leaving the organisation,” one of the sources told Inc42.
The employees have also not received their Form 16 for this year. Employees believe that BYJU’S not making TDS payments is the reason for this.
It is pertinent to note that while BYJU’S has been in the news for all the wrong reasons in the recent past, the entire edtech space in the country is under tremendous stress currently. Amid these, legacy educational companies are eyeing acquiring small edtech firms at cheap valuations to strengthen their respective portfolios. Earlier this year, Inc42 reported that Unacademy held initial discussions with K-12 Techno Services for an acquisition.
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