After March salary delay, layoffs haunt BYJU’s employees

Amid a severe cash crunch in the wake of restrictions on the release of funds raised via a rights issue, ed-tech major BYJU's has reportedly initiated a layoff exercise to cut costs and manage expenses. The company email sent to employees says their last working day will be on March 31, 2024, and that they can contact separations@byju.com for any queries related to the exit process.

The company has termed the layoff exercise as "business restructuring", which is being done to reduce the cost base and better cash flow. BYJU's has not revealed official information regarding the number of employees who were handed over the pink slips, although reports suggest it could be anywhere between 100-500. The company employs around 14,000 employees in India alone.

"We are in the final stages of a business restructuring exercise announced in October 2023 to simplify operating structures, reduce the cost base, and better cash flow management," a BYJU's spokesperson says.

BYJU's has said the "collective stress" caused by the dissenting foreign investors – Prosus, Peak XV Partners, General Atlantic, Chan-Zuckerberg Initiative – have prompted some unforeseen situations for the departing employees, but assured to put it behind as soon as it gets full support for the $200 million rights issue.

Citing the company founders' legal spat with four foreign investors, BYJU's says the start-up, which was once the poster child of the start-up scene in India, is going through an "extraordinary situation" because of the ongoing litigation with the four investors. This has caused "tremendous stress" to the ecosystem, says BYJU's.

"We regret the unfortunate situation the company has been forced into. Still, it is something that we will put behind us soon with majority investor support for the $200 million rights issue," the spokesperson adds.

BYJU's, in another letter sent to its employees, on Monday said it won't be able to pay March salaries on time due to "restrictions" on the funds raised through its recent rights issue. It had failed to pay full salaries to most of its staff in February 2024 as well.

The Bengaluru-based company has blamed a few of its "misguided foreign investors" for causing problems. It said these investors had obtained an interim order from the court in late February 2024, which restricted the usage of the funds raised through its rights issue. The company says the irresponsible action by these "4 foreign investors" has compelled it to "temporarily hold the disbursal of salaries" until the restriction is lifted.

Posing full faith in the Indian judicial system, BJYU's says it is waiting for a favourable outcome that will enable it to use the funds raised through the rights issue and alleviate the financial challenges.

There’s no clarity on the stance of dissenting investors. However, they seem in no mood to budge even as BYJU's has offered 72 more hours for them to subscribe to the recently floated rights issue, which – if not subscribed – could dilute their shareholding in the company.