Byjus, the leading educational technology company, in India, has made a decision to downsize its office space in Bengaluru as a cost-cutting measure due to funding delays. Additionally, they have also relinquished a portion of another office located in the city. Byjus is currently facing difficulties. Is actively dealing with various challenges, such as employee layoffs and disagreements, with lenders all while striving to secure significant funding.
Byju’s, India’s leading ed-tech firm, has made strategic moves to cut costs and improve liquidity during a delay in funding, resulting in the vacation of its largest office space in Bengaluru. The company has also relinquished a portion of another office in the city, as reported by reliable sources.
In Bengaluru, Byju’s had three office spaces, including the sizable 5.58 lakh square feet property in Kalyani Tech Park that it recently vacated. To accommodate the change, the company has asked its employees to either work from its other premises or from the comfort of their homes, starting from July 23. Furthermore, it has given up two out of the nine floors it previously occupied in Prestige Tech Park.
According to a statement from Byju’s spokesperson, the company currently rents over 3 million square feet of office space across the country, aligning its expansion and reduction decisions with changes in working policies and business priorities. Such flexibility is aimed at enhancing operational efficiencies.
Last year in June, Byju’s took on leases for two buildings, Magnolia and Ebony, in Kalyani Tech Park. However, they vacated the Magnolia building last month, relocating the employees to the Ebony building. The employees have now been requested to work from Prestige Tech Park and the main office on Baneghatta Main Road, as disclosed to the media.
The decision to vacate the leased office space covering around 5.58 lakh sq ft will save Byju’s close to Rs 3 crore in monthly rent expenses.
This move comes amid significant financial stress experienced by the country’s most valuable unicorn, which has been facing various challenges, including disputes with lenders. Byju’s has been seeking a fund infusion of over $700 million since the beginning of the year, but the funding has not been finalized.
In addition to vacating office spaces, Byju’s had to resort to cost-cutting measures, leading to the layoff of over 1,000 employees last month. Nevertheless, the company has reassured the Byju’s Tuition Center (BTC) employees in an emergency townhall meeting on July 22 that there will be no further layoffs at BTCs.
Byju’s faced a pivotal moment in March of the previous year, when it successfully raised a staggering $800 million in a funding round, valuing the company at $22 billion. Backed by prominent investors like Peak XV Partners (formerly Sequoia Capital India), Prosus, and Sofina, the company encountered several challenges since then. These included the resignation of its auditor and the departure of three key investor board members, alongside issues such as accounting irregularities, disputes with lenders, mass layoffs, and mounting losses.
Furthermore, the Enforcement Directorate conducted searches at Byju’s offices in Bengaluru in April, under the provisions of the Foreign Exchange Management Act, further adding to the company’s difficulties. As of now, the company still needs to file its audited results for FY22 (2021-22).
During FY21 (2020-21), Byju’s reported substantial losses of over Rs 4,500 crore, while its revenue experienced a slight decline. Interestingly, FY21 was the first year of Covid, which significantly boosted the online learning sector.
Byju’s fair value has been marked down internally twice by BlackRock, the world’s biggest Asset Management Company (AMC). Currently, BlackRock values Byju’s at $8.4 billion, representing a 62 percent decrease compared to its last valuation of $22 billion.
Byju’s, founded over a decade ago by former teacher Byju Raveendran, has raised over $5 billion in funding, with the majority obtained in the last five years.
