Byju's Continues Cost-Cutting; vacates its biggest office space in Bengaluru

Byju's Continues Cost-Cutting; vacates its biggest office space in Bengaluru

Byju’s, India’s most valued edtech company, has vacated its largest office space in Bengaluru, as it seeks to cut costs and shore up liquidity amid a delay in funding. It has also given up a portion of another office space in the city, sources said.

Byju’s has three office spaces in Bengaluru, including the 5.58 lakh square feet property in Kalyani Tech Park that it has vacated. The company has asked the employees to work out of its other premises or from their homes from July 23, at least six employees confirmed. The company has also given up two out of nine floors it had in Prestige Tech Park, the employees said.

"Byju's has over 3 million square feet of rented spaces across the country to support its requirements. Expansion and reduction in office space is based on changes in working policies and business priorities which is very regular and is aimed at boosting operational efficiencies," a spokesperson for Byju's said.

The company took two buildings - Magnolia and Ebony - in Kalyani Tech Park in Brookfield on lease in June last year. It vacated Magnolia last month, shifting the employees to Ebony. It has asked all the employees to work from Prestige Tech Park and its main office on Baneghatta Main Road, the employees told.

Security personnel at Kalyani Tech Park confirmed the development and said the company will be exit Ebony by August. Byju's had leased five floors in Magnolia and six floors in Ebony. According to employees and the security officials, it vacated four out of the six floors in Ebony last week, and will give up the rest by August.

The company had leased these spaces with a lock-in period of three years. Vacating the leased office space of about 5.58 lakh sq ft, the company will save close to Rs 3 crore on monthly rent.

Byju’s move to vacate office spaces attains significance as it highlights the financial stress at the country’s most-valued unicorn, which is tackling multiple problems, including a tussle with lenders. Byju’s has been eyeing an over $700 million fund infusion since the start of the year, but the company has not been able to close it.

Last month, Byju’s had come under the scanner of the Employees Provident Fund Organisation (EPFO) over non-payment of PF dues, in what was another instance highlighting cash flow issues for the company. Even for June, the company has paid provident fund (PF) only for 738 employees, despite agreeing with the EPFO to clear payments before July 15. For May, the company had PF payments for close to 25,000 employees, data on official EPFO portal showed.

Byju’s also laid off over 1,000 employees last month, in what was another cost-cutting initiative. On July 22, Moneycontrol reported that the company held an emergency townhall with Byju’s Tuition Center (BTC) employees, where it committed that it would not be doing any other layoffs at BTCs. BTC employees were planning a pan-India protest on July 25 amid speculation of more layoffs.

Byju's touched a new high in March last year when it raised a massive $800 million round at a $22-billion valuation. The company, which counts backers like Peak XV Partners (formerly Sequoia Capital India), Prosus and Sofina among others, recently was in deep waters after the resignation of its auditor, and the departure of three key investor board members.

But since then, the company has come under fire for several more reasons, including accounting irregularities, tussles with lenders, mass layoffs and mounting losses.

Byju's offices in Bengaluru were also searched by the Enforcement Directorate, a financial investigation agency, in April, under provisions of the Foreign Exchange Management Act. The company is yet to file audited results for FY22 (2021-22).

For FY21 (2020-21), Byju's reported a huge jump in losses to more than Rs 4,500 crore, while its revenue dropped marginally, surprisingly, as FY21 was the first year of Covid that gave online learning companies a shot in the arm.

Byju's fair value was also marked down internally twice by BlackRock, the world's biggest Asset Management Company (AMC). BlackRock has currently pegged Byju's fair value at $8.4 billion, about 62 percent lower than Byju's last valuation of $22 billion.

Founded over a decade ago by former teacher Byju Raveendran, Byju’s has raised over $5 billion, most of which was in the past five years