To say the least edtech decacorn BYJU’S is not in the best shape, and the founder Byju Raveendran and his workforce need a quick turnaround for a better tomorrow.
For one, hardly anything seems to be on track for the country’s highest-valued edtech decacorn — be it the $1.2 Bn Term Loan B headache, further triggered by lender lawsuits in the US, sinking acquisitions or the company’s never-ending layoff spree. The founder’s efforts to raise funds have also not materialised.
At the helm of affairs, Raveendran is holding talks with the disgruntled lenders, trying to sell two of BYJU’S upskilling platforms, Great Learning and US-based Epic, which could fetch it $800 Mn. However, it only seems to be a distant dream.
According to Inc42 sources, Raveendran is trying to raise nearly $250 Mn for BYJU’S most promising subsidiary, Aakash Educational Services Limited (AESL), in a secondary share sale where he is likely to dilute his 30% stake and use the cash to pay off some part of the debt.
AESL will likely see the return of its promoter Aakash Chaudhry as the CEO in a share swap deal, which will, to some extent, wrest control of the entity with the Chaudhry family.
Meanwhile, the BYJU’S founder has given the reigns of the India business to his earliest colleagues and former upGrad India CEO Arjun Mohan, who has now taken the CEO tag from Raveendran’s other confidante, Mrinal Mohit. For the uninitiated, both Mohit and Mohan were a part of BYJU’S founding team.
So, where does it leave Mohan?
Well, to answer in brief, Mohan has a lot on his plate. Apart from culling the company’s ever-bloating losses and stabilising falling revenues of the company’s core business, the new CEO has miles of roiling waters ahead of him to navigate the BYJU’S creaking ship.
Ever since onboarding the BYJU’S ship last month, Mohan’s intentions indicate just one thing — he does not want any dead weight on the company. This is probably why he is super focussed on integrating verticals and letting go of senior executives.
At a time when Mohan has barred employees from communicating with the media, Inc42 has learnt about a number of developments unfolding at the edtech giant under the new leadership.
HR, Sales And Finance Depts On New CEO’s Turnaround List
According to sources, Mohan, who was earlier the chief business officer at BYJU’S and has also worked with the sales and marketing teams, is said to have hit the pause button on hiring across departments like finance, technology, marketing, training, and auditing.
However, the company will continue to hire business development associates (BDAs) to perk up its revenue stream.
A few employees at BYJU’S told Inc42 that the company has already sacked several employees in the last 10 to 15 days. The pink slips have been given to mid- and senior-level employees as part of the company’s plan to lay off as many as 4K staffers in yet another retrenchment exercise. Similarly, the integration of various verticals has resulted in the elimination of many redundant roles at the company.
“There is a rumour going on in the Bengaluru head office that the company will now be brought down to 2015 levels when it comes to the number of employees, with more focus on junior-level positions,” a source said.
If this is the case, Mohan could be looking at significantly deflating employee expenses, which ballooned to 1,943 Cr in FY21 from INR 420 Cr in FY20.
Meanwhile, we have been told that the management is keeping a close watch on finance, sales and customer care departments to curb the rise of unethical practices — another key reason for the company’s ailment.
In fact, a source said that the company also attracted the government’s intervention for getting its hands on the bank statements of some of its customers and applying for loans without their consent. Inc42 could not independently verify these claims.
Further, finance operations have been restructured and partnerships with lenders are also being reworked to eliminate any malpractices.
“Ideally, this is what the company was expected to do in the first place,” a BYJU’S mid-senior executive said, requesting anonymity.
On the contrary, as losses kept piling up, BYJU’S was looking at shutting down offices in 60 cities across India last year to curb the infrastructure costs and switch to inside sales instead of field sales.
In July this year, the edtech giant vacated multiple offices in Bengaluru to save rental costs.
As per multiple sources, field sales will now be one of the top priorities of the new CEO, who is also keen on hiring more BDAs.
Fixing The Revenue Rationale
Questions, too, have been raised on BYJU’S for its unsustainable revenue recognition practices and exaggerated sales figures, especially when it came to the sale of its tablets and online courses.
In FY21, BYJU’S adopted a new revenue recognition model, which proved to be of little help. Following the release of its FY21 results, the company claimed that much of the losses it incurred were due to changes in the way it recognised multi-year revenues.
Raveendran had then said that around 40% of the revenue collected in FY21 got deferred, which would have otherwise resulted in 60%-65% revenue growth.
During the year, the company reported a slight rise in revenue from operations, which stood at INR 2,280 Cr in FY21 versus INR 2,189 Cr a fiscal ago. And the edtech giant was seen drenching in record losses of INR 4,588 Cr in FY21, up a massive 1,880% year-on-year (YoY).
Meanwhile, we have been told that the company has now floated a mandate, across the sales departments for both BYJU’S online and offline businesses, to acknowledge real revenues and not the EMIs that are yet to be realised.
Wait-And-Watch Approach For BYJU’S Tuition Centres
We have been told that Mohan isn’t very confident about the expansion of the company’s tuition centres and could shut down half of them by December this year. The centres that have failed to generate desired revenue targets and have only added infrastructure and marketing costs will be on BYJU’S India CEO’s hit list.
Under the reign of its erstwhile CEO, Mohit, BYJU’S had set an ambitious target to open nearly 500 offline coaching institutes last year. The edtech firm ended up setting up 300 institutes. It had roped in top celebrities, including actor Shah Rukh Khan, to endorse the offline centres when rival Unacademy was aggressively solidifying its offline footprint.
BYJU’S had announced that its tuition centres will cater to the K-12 education space. However, one year on, these centres, too, seem to be ailing with the dearth of quality teachers, customer service support and infrastructure.
As per a report published by Moneycontrol, 60% of the tuition centres set up by BYJU’S had customers requesting course refunds and cancellations.
The report highlights that the company’s tuition centres received a total of 43,625 refund requests between November 9, 2021, and July 11, 2023. Of these, the company processed 41,198 requests, accounting for approximately 95% of the total refund requests. To date, the edtech has sold nearly 75,000 tuition centre subscriptions.
However, BYJU’S refutes the numbers cited by the publisher.
Meanwhile, sources told Inc42 that several BYJU’S Tuition Centres (BTC) in North India were shut after many parents protested, seeking refunds and inviting police intervention.
A former senior executive of BYJU’S, who was associated with the company’s offline tuition business, told Inc42 that parents were not satisfied with the mode of teaching. “Some teachers were taking online classes even when students were physically present at the centres,” the senior executive said.
The faculty also kept changing as BYJU’S looked to hire contractual teachers on reduced pay scales, leaving both parents and teachers more and more dissatisfied, multiple sources said.
Just a month before BYJU’S new CEO, Mohan, took over the reins of the company, some top executives heading BYJU’S Tuition Centres stepped down. These executives were Prathyusha Agarwal, the chief business officer of BYJU’S; Himanshu Bajaj, the Business Head of BTC, and Mukut Deepak, the business head for Classes IV-X.
According to media reports, BYJU’S did not pay performance-linked incentives to its BTC faculties, which also led to many voluntary exits.
In addition, there are huge infrastructure and employee costs that BYJU’S bears on behalf of BTC.
“If the tuition centres are not adding any value then Mohan may scale them down as well,” a source said.
Inc42 reached out to BYJU’S with an extensive questionnaire about the company’s operational overhaul. As of this article’s publication, we have yet to receive a response.
The Fate OF BYJU’S Workforce Hangs In The Balance
BYJU’S has been brutally shedding its headcount since last year. Right now, the layoff axe is hanging over senior employees, as many senior managers, team leaders, software engineers have already been let go. This is in stark contrast with the ex-CEO’s (Mohit) policy of downsizing on-field sales representatives and associate-level employees.
There is no denying that the current CEO wants to increase the cash flows of the company by bringing the employee count down. However, given the fact that Mohan is laser-focussed on boosting the revenues of BYJU’S core business, he will need BDAs to bring in sales.
“But, for now, senior employees are looking at other edtech firms for a possible job switch at the earliest. The regular changes in team structures, PIPs, and revenue targets have only added to the stress here and hence many employees are looking to leave BYJU’S,” a senior manager at the edtech said, requesting anonymity.
Employees no longer see BYJU’S as a sustainable career but rather as a quick transition to better alternatives. This sentiment is further corroborated by former BYJU’S employees’ outbursts on social media regarding an alleged toxic work culture.
Mohan now faces the challenging task of not only rebranding the edtech decacorn but also ensuring that the organisation gets a sustainable revenue boost, especially in India.
The company has finally completed the audit of all group subsidiaries and will likely float the audited FY22 financials this week. And experts foresee a dismal FY22 performance.
This is because even after curtailing employee expenses and infrastructure costs in FY23, including multiple restructuring attempts, hopes of anything promising appear to be bleak.
However, Mohan’s wait-and-watch strategy for asset-heavy tuition centres could be a step in the right direction, especially in a highly fragmented tuition centre market.
As of now, the new CEO seems to be taking a U-turn on many fronts – from what BYJU’S erstwhile CEO, Mohit, was doing to salvage the company or how the edtech giant has been running to date.
Will his antithesis prove to be the turnaround BYJU’S has been looking for long? Well, that’s something even we are keen on finding going ahead.
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