The Karnataka High Court (HC) has reportedly set aside the National Company Law Tribunal’s (NCLT’s) interim order, passed right month, restraining embattled BYJU’S from undertaking a second rights issue.

Hearing BYJU’S petition against the NCLT’s order, Karnataka HC’s Justice SR Krishna Kumar sent the matter back to the Tribunal for a fresh consideration, Bar and Bench reported.

BYJU’S declined to comment on the development.

The HC order will come as a relief for the cash-starved edtech startup. Last month, hearing a petition filed by investors General Atlantic Singapore and Sofina S.A., the NCLT asked the Byju Raveendran-led company to maintain the status quo with regard to existing shareholders and their shareholding. 

It asked BYJU’S to not proceed with the second rights issue till the petition against the first rights issue was disposed of.

The petitioners argued that BYJU’S proposed a second rights issue by way of an offer letter dated May 11, which opened on May 13 and is scheduled to end on June 13. 

Meanwhile, sources at BYJU’S then told Inc42 that there was no second rights issue and the rights issue being referred to by the investors was an extension of its previous $200 Mn rights issue.

They said that while BYJU’S received commitments worth over $200 Mn for the rights issue, it was able to close it partially as some of the commitments didn’t translate to fund infusion. As a result, the company floated the new offer. 

Following the Tribunal’s stay, BYJU’S moved the Karnataka HC against the NCLT order. The next NCLT hearing in the matter is scheduled for July 4.

Behind the courtroom drama is BYJU’S contentious rights issue. It is pertinent to note that the proceeds raised by BYJU’S from its first rights issue are also held in a separate escrow account, as per the NCLT’s order. 

BYJU’S, once the poster child of the edtech ecosystem, is currently in the news for all the wrong reasons. From multiple insolvency cases, allegations of hiding funds, and rising losses to a severe cash crunch, fight with investors, and layoffs – the startup is dousing fires on multiple fronts.

The post Karnataka HC Sets Aside NCLT’s Stay On BYJU’S Second Rights Issue appeared first on Inc42 Media.

Gaurav Munjal-led edtech startup Unacademy undertook another restructuring exercise last month, which resulted in 250 employees losing their jobs, sources told Inc42.

While 150 employees were from the sales department, who were fired for not being able to meet their “sales targets”, the remaining 100 employees were from various other departments, the sources said.

A spokesperson of Unacademy confirmed the development with Inc42 but didn’t disclose the number of employees impacted by the layoff round. 

“As part of our ongoing efforts to streamline operations and enhance business efficiency, we have recently undergone a restructuring exercise. This was necessary keeping in mind the company’s goals and vision for the year, as we focus all our efforts on sustainable growth and profitability. Consequently, some roles have been impacted. While this transition won’t be easy, we will be supporting all impacted individuals during this transition,” the spokesperson said.

Financial Express was the first to report the development. As per the report, around 600 employees were impacted by the restructuring exercise. 

It is pertinent to note that the latest restructuring exercise was an addition to the growing number of layoff rounds undertaken by Unacademy over the last couple of years. As per Inc42’s layoff tracker, Unacademy has laid off around 2,000 employees since the onset of the funding winter. 

In May this year, Inc42 exclusively reported that the startup’s medical entrance test preparation platform PrepLadder undertook a layoff exercise amid a shift in its sales strategy. Sources told Inc42 then that the NEET preparation platform laid off around 145 employees, which was almost 25% of its workforce. It was PrepLadder’s third round of layoffs in the past three years. 

Unacademy has been looking to raise funds for over a year now but hasn’t been successful so far. Recently, one of Unacademy’s cofounders, Hemesh Singh, stepped down from his executive role and moved to an advisory role. 

Singh, along with Munjal and Roman Saini, founded Unacademy in 2015. The Bengaluru-based startup claims to have a network of 91K registered educators (teachers) and over 99 Mn learners.

Sumit Jain, a partner at Unacademy, is reportedly going to replace Singh on the startup’s board seat.

Last month, Inc42 learnt that K-12 Techno Services held talks to acquire Unacademy. However, the talks are at initial stages.

Peak XV Partners-backed Unacademy narrowed its consolidated net loss by almost 40% to INR 1,678.1 Cr in the financial year 2022-23 (FY23) from INR 2,847.9 Cr in the previous year, on the back of a sharp reduction in costs.

Unacademy Group has raised about $800 Mn in funding till date. Last valued at $3 Bn, the startup counts Tiger Global, Elevation Capital, General Atlantic, and Meta among its backers.

The post Unacademy Fires Another 250 Employees To Turn Profitable appeared first on Inc42 Media.

Trouble seems to be mounting for BYJU’S as now Karnataka Labour Minister Santosh Lad has asked the embattled edtech startup to settle the overdue salaries of its former employees “at the earliest”.

During a meeting with the representatives of BYJU’S parent entity Think and Learn Pvt Ltd, the minister flagged concerns over the outstanding dues owed to its former employees, Moneycontrol reported.

As per the report, Lad told BYJU’S officials to “settle at least 50% of the dues owed to former employees at the earliest” and sought assurance from the company that it will settle the remaining dues in due time.

BYJU’S has reportedly informed the Karnataka government that its funds are currently kept in an escrow account with the National Company Law Tribunal (NCLT).

It is to be noted that the NCLT earlier barred BYJU’S from using the proceeds from the second rights issue and asked it to park the funds in a separate account till the settlement of the case.

The hearing on the plea is scheduled for Thursday (July 4).

The edtech company has reportedly pledged to clear all dues owed to former employees within a month of receiving a relief order from the NCLT.

Inc42 has reached out to BYJU’S for a comment on the development. The story will be updated based on the response.

This comes after Karnataka’s labour department reportedly received a barrage of complaints from about 160-200 former BYJU’S employees, alleging the edtech firm had not settled dues worth nearly INR 4.5 Cr owed to them, even months after their termination.

It was earlier reported that founder and CEO Byju Raveendran took personal debt to clear part of the overdue employee salaries for the month of March.

Meanwhile, BYJU’S has also cut fixed salaries of new hires by 90%, sources told Inc42.

Once the world’s most-valued edtech firm, BYJU’S has been facing pressure from all directions from shrinking revenues to funding vacuum and consequent mass layoffs to legal trouble with the NCLT and probe by the Enforcement Directorate.

Last week, the Ministry of Corporate Affairs said that the probe into potential governance lapses at BYJU’S was still “ongoing” and that reports claiming the edtech major had been cleared of financial fraud were “inaccurate and misleading.”

Last month, US-based asset management company Baron Capital cut BYJU’S valuation by more than 99% to $120 Mn as of March 31, 2024.

Adding to its woes, Netherlands-based Prosus, which holds a 9.6% stake in BYJU’S, wrote off its entire investment in the edtech firm.

Furthermore, OPPO has moved the NCLT, alleging BYJU’S owes the smartphone manufacturer INR 13 Cr.

The post Karnataka Labour Minister Asks BYJU’S To Resolve Dues Of Former Staff appeared first on Inc42 Media.

Amid the ongoing churn in the Indian edtech sector, Unacademy cofounder and CEO Gaurav Munjal has placed the blame of troubles at competitor BYJU’S on CEO Byju Raveendran not listening to “anyone”.

In a post on X, Munjal said, “Byju failed because he didn’t listen to anyone. He put himself on a pedestal and stopped listening. Don’t do that. Never do that. Don’t listen to everyone but have people who can give you blunt feedback.”

Sharing his learnings on the microblogging site, Munjal said that founders should always “act” on feedback even if they do not like it. 

With this, Munjal has become the latest Indian edtech cofounder to join the debate around troubles at BYJU’S. In February, upGrad’s Ronnie Screwvala said that due to ‘one rotten apple’ the industry was witnessing reputational damage. 

Responding to a tweet about shareholders of BYJU’S convening an extraordinary general meeting (EGM) to oust Raveendran and his family, Screwvala, in a post on X, had said, “Finally someone smelt the coffee!! Hope it’s not a whiff and then whimper but they will stay the course and get this done – for the whole ecosystem! For India as an investment destination! For just credibility overall of an otherwise sunrise and sunshine sector”.

However, these potshots by peers are not without reason. 

Troubles Galore At BYJU’S 

At the top of the funding boom in pandemic-hit 2020 and 2021, BYJU’S raised billions of dollars from marquee names in the venture capital (VC) and private equity ecosystem. 

However, as the pandemic-era growth waned as schools opened, the edtech major was straddled with questions about sustainability and profitability. As funding winter made matters worse for raising capital in 2022 and 2023, the company found itself at crossroads, as the bevy of acquisitions in previous years failed to pay off. 

The aftermath saw the company undertake a series of layoffs as financial reports, which were delayed multiple times, painted a bleak picture of the company’s finances. Nearly 22 months after the end of the financial year 2021-22 (FY22), the edtech giant filed its financial statements which showed that its loss ballooned 81% to INR 8,245.2 Cr during the year from INR 4,564.3 Cr in FY21.

As a result, the company has fired more than 5,000 employees since 2023. Besides, it has delayed employee salaries multiple times, seen exodus of top leadership, and restructured its business multiple times. BYJU’S is also yet to file its financial statements for FY23.

Making matters worse are a dozen-odd legal and insolvency cases filed by its investors and vendors. Earlier this year, its shareholders banded together to convene an EGM to oust Raveendran and his family from the op management. 

While representatives of three major investors left the company’s board last year, shareholders such as Baron Capital and Prosus almost entirely wrote off their stake in the edtech startup this year. As if this was not enough, BYJU’S raised a rights issue at a $250 Mn post-money valuation, down 99% from its peak $22 Bn valuation in 2022. 

And there seems to be no end to the company’s troubles, as the Ministry of Corporate Affairs (MCA) is probing BYJU’S for alleged financial fraud. 

While BYJU’S troubles are well documented, the entire edtech sector has been affected by the ongoing funding winter and high cash burn in the last two years. Earlier this month, Inc42 reported that K-12 Techno Services was in talks to acquire Gaurav Munjal-led Unacademy.

Amid all these, Munjal took to X to share his learnings from the last two years. 

Munjal’s Lessons For Founders 

In a series of posts on X, Munjal said that all 2021 valuations for startups were “bloated” and the current time is reality, not 2021. 

Calling on all founders to be transparent, Munjal said it is important to increase transparency by 10X with investors and team members when times are tough. “When making tough decisions, don’t hide behind silent layoffs,” the Unacademy CEO added. 

He also asked founders to “learn” from people who have gone through a similar journey as theirs to avoid repeating mistakes. Munjal said that “understanding unit economics on Day One” is probably the “best thing” a founder can do. 

Warning entrepreneurs against holding any biases, he said it is important to focus on what customers want. He added that it is “must” to have some form of offline play while catering to Indian audiences.

Noting that “business model innovation” is more important than product innovation, Munjal said that while the best product does not always win, the best distribution does. He also said that experimentation is the key and founders should not “give up” on research and development (R&D). 

Without taking names, he also said that while some investors are assets, others are “liabilities”. He added that the “trick” is to figure out the backers that are “assets” and listen to them.

He also urged entrepreneurs to look inwards and learn from how the “best Indian companies” scaled up operations. Concluding his posts, he added that winning “matters most” when a company is facing “constraints”. 

The post Byju Raveendran Failed As He Did Not Listen To Anyone: Unacademy CEO appeared first on Inc42 Media.

Ronnie Screwvala-led edtech unicorn upGrad is looking to raise INR 287.5 Cr (about $34.4 Mn) debt from financing platform EvolutionX Debt Capital. 

As per the startup’s regulatory filings accessed by Inc42, its members passed a resolution during an extraordinary general meeting to issue and allot 25 Lakh non-convertible debentures (NCDs) and 3.75 Lakh optionally convertible debentures (OCDs) to the investor. 

While 3.8 Lakh NCDs will be issued to EvolutionX Debt Capital India Fund I, 21.2 Lakh NCDs will be issued to EvolutionX Debt Capital Master Fund I for INR 1,000 apiece. Besides, 3.75 Lakh OCDs would be issued to EvolutionX Debt Capital India Fund I.

The startup said it plans to use the proceeds from the debt funding round to fuel its growth capital, fund operating expenses of the company, and for general corporate purposes.

The development was first reported by Entrackr. 

Earlier this year, it was reported that upGrad was looking to raise $100 Mn to acquire US-based education firm Udacity. While discussions were reportedly in advanced stages back then, there has been no update on it since then. 

Founded in 2015 by Screwvala, Mayank Kumar, Phalgun Kompalli and Ravijot Chugh, upGrad offers higher education courses and skilling programmes in collaboration with universities. 

The edtech unicorn has raised a total funding of over $672 Mn till date and counts the likes of Temasek, Lupa Systems, and International Finance Corporation among its investors. It last raised INR 300 Cr ($36.5 Mn) via a rights issue in March 2023.

In its last disclosed financial results for fiscal year 2022-23 (FY23), the startup’s operating revenue shot up 97% to INR 1,169.6 Cr from INR 595 Cr in the previous year. Its net loss surged 76% to INR 1,141.5 Cr during the year from INR 648.2 Cr in FY22.

The post Edtech Unicorn upGrad To Raise $34 Mn Debt Funding From EvolutionX appeared first on Inc42 Media.

Smartphone manufacturing major OPPO has reportedly informed the National Company Law Tribunal (NCLT) that BYJU’S owes it INR 13 Cr for preinstalling the latter’s mobile app on phones manufactured by the company.

As per a Moneycontrol report, OPPO has sought urgent orders from the NCLT claiming the edtech major’s promoters were ‘absconding’. However, senior advocate Pramod Nair reportedly took a strong objection to OPPO’s lawyer during the hearing process for using the word ‘absconding’. 

OPPO said that BYJU’S had entered into an agreement with the company to preinstall the edtech platform’s apps on its mobile phones to reach a wider audience. However, the beleaguered edtech major did not pay the amount that was agreed upon in the deal.

In May this year, OPPO filed an insolvency plea against BYJU’S, joining several other operational creditors filing cases against the edtech major, to recover its pending dues.

OPPO has now repeatedly said that BYJU’S admitted to owing it money, and the former has a straightforward case to refer the edtech startup to the insolvency resolution process.

The hearing on the plea has been adjourned till July 3.

The development comes a day after BYJU’S settled its dispute with Teleperformance Business Services. Following this, the NCLT instructed the French digital services company to file a memo indicating its intention to withdraw the insolvency plea to finalise the case closure against BYJU’S.

Meanwhile, new reports emerged on June 26 that the Ministry of Corporate Affairs (MCA), after investing BYJU’S for potential corporate governance lapses, could not find any evidence to prove any malpractices.

However, refuting the report, the ministry said that its probe into the affairs of the troubled edtech startup was “ongoing”. 

The financial struggles in the edtech major continue as NCLT has barred BYJU’S from raising funds through a second rights issue. Earlier this week, the company moved the Karnataka High Court challenging the NCLT’s order.

The post OPPO Tells NCLT That BYJU’S Owes The Mobile Phone Manufacturer INR 13 Cr appeared first on Inc42 Media.

Hours after a news report claimed that the Ministry of Corporate Affairs (MCA) has cleared BYJU’S of any financial fraud, the ministry rejected the report. 

In a statement, the ministry said that its probe into the affairs of the troubled edtech startup is “ongoing”. 

“It is categorically clarified that such reports are factually incorrect and misleading. The proceedings initiated by MCA under the Companies Act, 2013, are still ongoing and no final conclusion should be drawn in this matter at this stage,” the statement said. 

Earlier in the day, Bloomberg reported that the MCA did not find any evidence of any financial fraud or accounting malpractice by BYJU’S. The report, however, claimed that the investigation found weak corporate governance at BYJU’S.

Additionally, the probe reportedly also found that the startup failed to disclose full details of acquisitions with all directors and purportedly held meetings to approve such deals at a short notice.

It is pertinent to note that the corporate affairs ministry ordered a probe into BYJU’S books after it failed to file its audited financials for the financial year ending March 2022 (FY22) on time.

The latest development comes at a time when the edtech major is fighting fires on multiple fronts. 

The biggest thorn in its flesh appears to be soaring losses, which jumped 81% year-on-year (YoY) to INR 8,245.2 Cr in FY22. The company is yet to file financial statements for FY23 and FY24. Meanwhile, operating revenue rose 120% YoY to INR 5,014.6 Cr during the year under review.

Besides, it is also grappling with issues such as a looming debt crisis, about a dozen legal cases, mass layoffs, insolvency proceedings, allegations of lax corporate governance guardrails, salary delays and a public fallout with its investors. 

From being pegged at $22 Bn in 2021, the startup’s valuation plummeted by more than 99% tio $250 Mn after it raised a rights issue at the reduced valuation. The aftermath saw investors moving court seeking the ouster and founder and CEO Byju Raveendran. 

Piling on top, Dutch investor Prosus, just days ago, wrote off its entire 9.6% stake in BYJU’S. Meanwhile, US-based asset management company Baron Capital also slashed BYJU’s valuation by more than 99% to $120 Mn at the end of March 2024.

Earlier in the day, it was reported that the edtech major settled its insolvency dispute with French digital services company Teleperformance Business Services.

The post MCA Refutes Reports Of It Clearing BYJU’S Of Fraud, Says Probe Ongoing appeared first on Inc42 Media.

Edtech major BYJU’S has reportedly settled with French digital services company Teleperformance Business Services, the National Company Law Tribunal (NCLT) was told today (June 26).

Earlier today, it was reported that a year-long investigation by the government revealed that the edtech major fell short on compliance issues but found no proof of wrongdoing such as siphoning of funds or manipulation of financial accounts.

As per Moneycontrol’s report, the insolvency court instructed Teleperformance to file a memo indicating its intention to withdraw the insolvency plea in light of the settlement, to finalise the case closure.

NCLT has repeatedly advised BYJU’S to settle with Teleperformance within a week. The tribunal cautioned that if the dispute remained unresolved by then, it would proceed to hear the case on its merits and issue an appropriate order.

On February 7, the NCLT issued a notice to BYJU’S regarding an insolvency plea filed by French outsourcing firm Teleperformance Business Services. The edtech firm had previously engaged outsourcing agencies including Teleperformance, Cogent E Services, and iEnergizer until mid-2022. By mid-2022, BYJU’S discontinued services with Teleperformance and Cogent E Services as part of cost-cutting measures amidst mounting challenges.

On April 18, NCLT granted BYJU’S a week to settle its payment dispute with Teleperformance Business Services. BYJU’S counsel informed the Bengaluru bench that efforts were underway to resolve the issue with the French outsourcing firm and expressed confidence in reaching a settlement soon. The NCLT adjourned the proceedings until April 30, indicating it would hear both parties if no agreement was reached by then.

At the heart of the matter is the insolvency plea of Teleperformance Business Services India, the Indian arm of the French customer services company Teleperformance, against BYJU’S. The company alleged that the Byju Raveendran-led company failed to clear pending dues of about INR 3-4 Cr. 

Teleperformance entered into a service agreement in April 2022 and it raised over 20 invoices amounting to over INR 4 Cr between March and August 2023, which went unpaid.

According to a Moneycontrol report, Teleperformance stated that BYJU’S agreed to settle the amount in three installments: INR 1.5 Cr in the first tranche, INR 2 Cr in the second, and INR 2.2 Cr in the final installment. Although BYJU’S has resolved its dispute with Teleperformance, it is currently engaged in approximately 10 similar proceedings with other operational and financial creditors.

This comes days after  BYJU’S moved the Karnataka High Court challenging the order of the NCLT restraining it from going ahead with the second tranche of its $200 Mn rights issue.

The development comes at a time when BYJU’S is embroiled in multiple legal cases in courts across India and the US. Disgruntled investors have accused the company of violating the NCLT’s February order.

The story traces its origins to February 2024, when reports surfaced that the edtech major was looking to undertake a rights issue at a 99% valuation cut. Subsequently, investors organised an extraordinary general meeting (EGM) in a bid to remove CEO Byju Ravendran and his family from leadership at the company.

The edtech giant’s net loss widened by 81% to INR 8,245.2 Cr in FY22 from INR 4,564.3 Cr in FY21. Operating revenue rose over 120% year-on-year to INR 5,014.6 Cr during the year under review.

The post BYJU’S Settles Dispute With Teleperformance, Plea To Be Withdrawn: Report appeared first on Inc42 Media.

The Ministry of Corporate Affairs that investigated BYJU’s for potential corporate governance lapses could not find any evidence to prove that the edtech major committed financial fraud or accounting malpractice.

The year-long probe by the government into BYJU’s books revealed that the edtech major fell short on compliance issues but found no proof of wrongdoing such as siphoning of funds or manipulation of financial accounts, Bloomberg reported, citing sources.

The investigation found that weak corporate governance and compliance failures, coupled with the change in funding environment were the primary reasons behind the ballooning losses at BYJU’S.

Furthermore, the ministry also acknowledged that the Byju Raveendran-led startup failed to disclose full details of acquisitions with all directors and held meetings to approve such deals at a short notice.

However, the probe did not offer clarity on whether Raveendran is to blame for the government lapses personally, or if he is qualified to run the company.

The development comes a year after the corporate affairs ministry ordered an inspection into BYJU’S books after it failed to file its audited financials for the financial year ending March 2022 (FY22).

The findings are expected to bring some respite to BYJU’s that has been reeling from a series of challenges, including looming debt crisis, impending mass layoffs, delayed salaries, a cash crunch and a bevy of legal and insolvency cases filed by its investors and vendors.

Once the poster child of the Indian startup ecosystem, BYJU’s was valued at $22 Bn at its peak in 2021. However, earlier this month, US-based asset management company Baron Capital cut BYJU’s valuation by more than 99% to $120 Mn as of March 31, 2024.

Recently, Netherlands-based Prosus, which holds a 9.6% stake in BYJU’S, wrote off its entire investment in the Bengaluru-based edtech startup.

The edtech giant’s net loss widened by 81% to INR 8,245.2 Cr in FY22 from INR 4,564.3 Cr in FY21. Operating revenue rose over 120% year-on-year to INR 5,014.6 Cr during the year under review.

The post Govt Probe On BYJU’S Flags Corporate Governance Lapses: Report appeared first on Inc42 Media.

Netherlands-based Prosus, which is one of the biggest stakeholders in BYJU’S, has now written off its entire investment in the Bengaluru-based edtech startup. In a recent document, Prosus holds almost 10% (9.6%) in the edtech startup. 

“We impaired BYJU’S down to zero at the end of FY24. The fair value written down was $493 Mn for FY24. We have written down BYJU’S primarily because we have inadequate information on the company’s financial health, liabilities and future outlook,” Prosus shared in a press statement with Inc42.

To add some context, Prosus has invested around $536 Mn in BYJU’S since 2018. At BYJU’S peak valuation – $22 Bn, Prosus 9.6% stake would be worth roughly around $2.2 Bn. 

The fresh development comes close on the heels of financial firm HSBC casting serious doubt on the future of BYJU’S, assigning zero value to Prosus’ nearly 10% stake in the company.

“We assign zero value to BYJU’S stake amid multiple legal cases and funding crunch,” HSBC said in a note on May 21.

The development comes soon after BYJU’S raised a $200 Mn rights issue at a valuation of $225 Mn. This is a 99% discount to its peak valuation of $22 Bn.

Recently, US-based asset management company Baron Capital Group reduced the fair value of its investment in the edtech firm by 99.85% to $120 Mn as of March 31, 2024.

Last week, the edtech giant moved to Karnataka High Court challenging the order of the National Company Law Tribunal (NCLT) restraining it from going ahead with the second tranche of its $200 Mn rights issue.

On June 13, Inc42 reported that the NCLT directed BYJU’S to maintain the current status of existing shareholders and their shareholdings. 

BYJU’S has been grappling with fires on multiple fronts, including a looming debt crisis, impending mass layoffs, delayed salaries, a cash crunch and a bevy of legal and insolvency cases filed by its investors and vendors.

The post Prosus Writes Off Its Entire $500 Mn Stake In BYJU’S To Zero appeared first on Inc42 Media.

Troubled edtech firm BYJU’S has moved the Karnataka High Court challenging the order of the National Company Law Tribunal (NCLT) restraining it from going ahead with the second tranche of its $200 Mn rights issue.

The plea is likely to come up for hearing today (June 24), ET reported.

On June 13, Inc42 reported that the NCLT directed BYJU’S to maintain the current status of existing shareholders and their shareholdings. 

This follows a previous order dated February 27, where the NCLT instructed BYJU’S not to issue shares without increasing its authorised share capital and to keep funds from a rights issue in a separate escrow account until the matter is resolved. 

The tribunal’s decision came after objections were raised regarding BYJU’S second rights issue, which began on May 13 and has been halted pending resolution of issues related to the first rights issue.

Following this, the tribunal restrained BYJU’S from going ahead with the second rights issue till the petition against the first rights issue is disposed of.

“The Respondents (BYJU’S) are further directed to keep the amounts collected so far since opening of the second rights issue in relation to this offer in a separate account which should not be utilised till the disposal of the main petition in CP No. 18/BB/2024. Further, status quo with regard to existing shareholders and their shareholding shall be maintained till the disposal of the main petition,” back then the tribunal said.

The development comes at a time when BYJU’S is embroiled in multiple legal cases in courts across India and the US. Disgruntled investors have accused the company of violating the NCLT’s February order.

The story traces its origins to February 2024, when reports surfaced that the edtech major was looking to undertake a rights issue at a 99% valuation cut. Subsequently, investors organised an extraordinary general meeting (EGM) in a bid to remove CEO Byju Ravendran and his family from leadership at the company.

Despite legal challenges, the EGM proceeded along with the rights issue, leading disgruntled investors to file a petition with the NCLT alleging oppression and mismanagement within the company. The investors, including Peak XV Partners, General Atlantic, Chan-Zuckerberg Initiative, and Prosus, claimed that BYJU’S was using funds from the $200 Mn rights issue against the Tribunal’s order to maintain shareholding status quo.

The investor plea also claimed that BYJU’S had not deposited the money it received from rights issue prior to February 27 in the escrow account. 

However, the company denied any wrongdoing. 

BYJU’S net loss surged 81% YoY to INR 8,245.2 Cr (close to $1 Bn) in FY22 even as operating revenues also rose over 120% to INR 5,014.6 Cr during the year under review, largely on the back of the coaching arm Aakash.

The post Second Rights Issue: BYJU’S Moves Karnataka HC Against NCLT Order appeared first on Inc42 Media.

Till two years ago, India’s edtech startups had all the leverage. They also had the funding, unbridled optimism and amassed talent by the thousands to scale up. But as we all know this story has come undone since 2022.

The past two years have shown the weak foundations on which this optimism stood — the edtech sector has led in terms of notable shutdowns and layoffs in the startup ecosystem. It’s quite clear now that edtech has lost its shine and a lot of the leverage.

But what it has also lost is the trust that is inherent in education businesses, and that’s not just from the consumer standpoint but also from the point of view of other more traditional education businesses. Given BYJU’S high-profile corporate governance meltdown, questions about multi-year revenue recognition, buried costs and a severe cash crunch, there’s definitely a pall over the edtech market in India.

Which is why the report this week about edtech unicorn Unacademy looking at a merger with K-12 Techno Services Private Limited (K-12 Techno) piqued our interest. What caught our eye specifically was the reported 50:50 partnership between the two companies, because it would be the first such deal in edtech history in India.

While Unacademy did not respond to our queries seeking a clarification on the development, a K-12 spokesperson declined to comment on the speculation.

Inc42 has learnt from two separate sources that while talks between the two companies are ongoing, but we are quite a away from even entering advanced discussions. More importantly, both sources claimed that if a deal materialises, it would not be a merger, instead, K-12 Techno would acquire Unacademy. However, the deal is nowhere close to done, as currently the companies only met to initiate talks.

Founded in 2010 by Jai Decosta and Maguluri Srikanth, K-12 Techno operates the chain of Orchids International Schools across India. Besides, the company offers full-stack solutions to educational institutions from curriculum and academic design to technology services, solutions for administrators and teachers as well as for education marketing. Decosta is currently the CEO and managing director at the company.

K-12 Techno would potentially leverage Unacademy to add a B2C test prep to its chain of Orchids International Schools and other B2B edtech services.

The first source, close to Unacademy’s leadership, said that the companies have held talks for the past few weeks, but these discussions have cooled down to some extent in recent days. At the moment, things are moving slowly on this front.

The second source, privy to developments at K-12 Techno, corroborated this claim, and added that K-12 Techno is far from convinced about the value that a potential Unacademy acquisition would add to the business. The source close to K-12 Techno Services claimed the company is yet to identify the profitable verticals and products in Unacademy.

“The first thing you need to know about K-12 is that it is a very profit-driven company. So the first step for K-12 is to understand the economic engine of Unacademy, and the company is yet to arrive at a clear conclusion on this front,” the source close to K-12 Techno Services said.

As per both sources, K-12 Techno is a profitable company on an EBITDA level (INR 100 Cr as of FY24), whereas Unacademy is yet to solve the unit economic challenges that have kept it mired in losses. Despite having higher revenue than K-12 Techno (as of FY23), Gaurav Munjal-led Unacademy is far from profitable (more on this later).

Unacademy K-12 Services

Currently, K-12 Techno runs Orchids International Schools in 19 locations in India for day schooling and five boarding schools. Our source in the company told us that last year, nearly 3,000 students graduated from class X across Orchids’ 20+ facilities in India.

On the other hand, 2015-founded Unacademy is primarily a test prep platform, which has recently expanded to offline or hybrid learning and also operates verticals such as Relevel (job assessment tests), NextLevel (gamified job search), and Graphy (course creation and management).

In June 2022, Unacademy launched Cohesive as a developer-focussed SaaS product, which then pivoted to generative AI content creation in 2023. Most recently, it has launched Unacademy Stars, a 12-week course designed for those looking to become Unacademy teachers, and expanded its language learning app Unacademy Languages for more foreign and Indian languages. Incidentally, Unacademy Languages is operated by Unacademy, Inc, the company’s US-based entity.

Unacademy’s vast product universe is one of the challenges that K-12 is looking to solve, according to sources. There’s a lot that K-12 Techno is less than convinced about. One of the sources added, “Unacademy needs a turnaround because it has huge losses, though the test prep business is said to be making money. K-12 wants to know whether it is making money on online courses or in offline learning, and which courses or verticals in test prep is Unacademy getting the most money from.”

Other hurdles in the way are Unacademy’s negative gross margins, which would not be accretive to K-12 Techno’s EBITDA-positive business. Every company has different verticals and each of these verticals may have varying accounting cycles and revenue recognition processes. “There are other questions too, such as what is the revenue recognition process or how does the company recognise multi-year revenue or revenue collected for future courses where there could be refunds,” according to the first source.

Has Unacademy Fixed Losses?

Over the years, K-12 Techno has raised more than $175 Mn from investors such as Peak XV Partners, Sofina, Navneet Education and others. Incidentally, Unacademy is also backed by Peak XV, but it has raised more than $440 Mn since inception, at a valuation of $3.5 Bn (as of 2021).

From the financial performance (FY23) standpoint, K-12 Techno seems to have utilised the funding raised in a more efficient way.

In FY23, K12 Techno registered INR 382 Cr in revenue with a loss of INR 39 Cr. According to sources, the company almost touched the INR 500 Cr mark in FY24 and a positive EBITDA of INR 100 Cr.

In comparison, Unacademy reported revenue of INR 907 Cr in FY23, with a staggering INR 1,678.1 Cr in net loss. Sources claimed that Unacademy has nearly doubled its revenue in FY24 which is now close to INR 2,000 Cr.

Inc42 could not verify the FY24 numbers as neither company has disclosed its performance.

Late last year, Munjal took to Twitter to announce that Unacademy had slashed its cash burn by 60% in the calendar year 2023. While the online business saw a degrowth of 30%, EBITDA was claimed to have improved by 87%. Munjal also claimed that the Unacademy Centres offline business had 32,000 students in 2023 from 6,000 in 2022.

He also said that the startup’s Graphy vertical was on the verge of achieving profitability, but did not reveal more details about this. But the improved EBITDA performance is certainly linked to the layoffs of over 2,000 employees since the beginning of 2022.

Besides, Unacademy also cut pay for higher management, and many senior-level employees have walked out of the company since late 2023, including:

• Arnab Dutta – Senior Vice President Strategy
• Vivek Sinha – Chief Operating Officer
• Abhyudaya Singh Rana – Chief of Staff, Chief Compliance Officer
• Subramanian Ramachandran – Chief Financial Officer
• Siddharth Manchanda – General Counsel
• Tina Balachandran – Senior Vice President, Talent and Culture
• Sachin Aggarwal – Head Franchisee Business (Offline Centres)
• Karan Shroff – Partner & Chief Operating Officer
• Ashish Arora – Senior Vice President & National Head Academics

Most recently, cofounder Hemesh Singh stepped away from the CTO role and day to day operations to take on an advisory capacity position.

The departures of these key leaders has undoubtedly stymied some of the momentum that Unacademy had achieved during the Covid years, and left the company bereft of the talent that had the institutional knowledge to turn things around.

Edtech’s Trust Deficit

Even so, the work put in over the past decade has created ‘Brand Unacademy’, which still has quite a pull in the market. In the case of Unacademy and K-12 Techno, the strategic match is plain to see.

As our second source added, “Synergistically, Unacademy is a great fit for K-12 Techno. Gaurav Munjal has built a massive brand for test prep, and from it would be a good way for K-12 to extend the revenue pipeline, as the next big step after the tenth or 12th grade is test prep.”

Given the lack of diverse employment opportunities in India, the test prep market continues to be in demand. The recent controversy around NEET results has also shown that there are a lot more problems to be solved in this space.

But then, there are deeper trust issues related to the high-profile meltdown of BYJU’S. And the erosion of trust is very real for those looking to raise funds or find exits. This is now perceived to be an industry-wide problem, especially in matters of revenue recognition.

According to a Bengaluru-based entrepreneur in the test prep space, “Investors want to plug all corporate governance holes after what happened at BYJU’S, which is why everything is delayed from fundraising to other strategic deals. Every disclosure and claim is being minutely examined.”

Besides revenue recognition, cost recognition is another aspect where founders are being pressed for answers. The founder quoted above added, “Two years ago, investors had little reason to suspect that companies are not removing the refund costs from revenue, or whether they are accounting for financing costs properly when offering courses on EMI through lending partners. But now these have become hygiene.”

In many cases, these problems are not just limited to edtech startups. It has become increasingly common to see corporate governance trouble stemming from revenue inflation or GMV inflation, so the trust erosion is pan industry.

Traditional educational institutions and schools — even those offering tech-first solutions — know that trust is paramount and have invested in building that for the long term. Orchids and K-12 have a track record of running schools for nearly 15 years, and while K-12 also relied on VC funding to grow and scale up to some extent, the profit-driven approach has paid off results.

Past M&As in the edtech space such as the $1 Bn BYJU’S-Aakash deal or Vedantu’s $40 Mn acquisition of Deeksha have shown mixed results for acquisitive edtech startups.

A long-drawn ownership battle in Aakash after the acquisition and the fact that loss-making BYJU’S depended heavily on its profits have had a negative impact on the offline coaching giant. Aakash was supposed to be margin accretive for BYJU’S, but the company’s situation has gone from bad to worse and BYJU’S has been accused of mismanaging the business to save its ship.

It’s less clear how Vedantu has leveraged Deeksha, since the edtech startup has remained under the radar relatively speaking, but like others in its space, Vedantu had a massive task of clawing back its way after reporting losses of INR 358 Cr in FY23.

The success — or lack thereof — of such deals often comes down to the entrepreneurial mindset and how it varies between new-age companies and so-called traditional businesses. Bringing these forces together is not an easy task and several acquisitions have failed to have the right impact as a result.

In Unacademy’s case too, we have written about how its acquisitions have not yielded the right outcomes and many of these were culled from the company in the past.

With ten years of operations, investors have shown patience with Unacademy too, now close to its 10th anniversary, but given the improving market for IPOs, this patience is wearing thin. If not in the case of Unacademy then certainly in the case of Swiggy, Ola, OYO and other startups that are of a similar age as the edtech unicorn.

An exit through an acquisition may not have been the vision that Gaurav Munjal harboured when starting the Unacademy journey, but it could well come to that.

From what we were told, it’s not even clear whether a potential deal will cover Unacademy’s entire business or whether it would just be the test prep vertical that would change hands. Sources claimed Unacademy has close to INR 1,600 Cr or $200 Mn in the bank, which offers it a long runway, but having nearly 30 shareholders on the cap table complicates the structuring and the contours of the deal.

After arriving at a decision on the viability of the acquisition deal, there is still the matter of ironing out these final nuances, which could take a few more months. All said, any potential deal is only likely to materialise towards the end of the year.

The post Merger Or Acquisition? Unacademy, K-12 Techno Services And Edtech’s Trust Deficit appeared first on Inc42 Media.

The Bengaluru bench of the National Company Law Tribunal (NCLT) has directed embattled edtech giant BYJU’S to maintain status quo with regard to existing shareholders and their shareholding.

The bench was hearing a plea filed by General Atlantic Singapore and Sofina S.A. against the edtech giant for violating the Tribunal’s earlier order on its $200 Mn rights issue.

In its order dated February 27, the NCLT asked BYJU’S to not allot shares without increasing the authorised share capital of the startup and to keep the funds received via the rights issue in a separate escrow account till the disposal of the matter.

The petitioners argued that BYJU’S proposed a second rights issue by way of an offer letter dated May 11, which opened on May 13 and is scheduled to end on June 13.

Following this, the Tribunal restrained BYJU’S from going ahead with the second rights issue till the petition against the first rights issue is disposed of.

“The Respondents (BYJU’S) are further directed to keep the amounts collected so far since opening of the second rights issue in relation to this offer in a separate account which should not be utilised till the disposal of the main petition in CP No. 18/BB/2024. Further, status quo with regard to existing shareholders and their shareholding shall be maintained till the disposal of the main petition,” the Tribunal said in its order.

The NCLT has scheduled the next hearing in the matter for July 4. 

Meanwhile, sources at BYJU’S told Inc42 that there is no second rights issue and the latest right issue being referred to by the investors is an extension of the previous $200 Mn rights issue.

They added that while BYJU’S received commitments worth over $200 Mn for the rights issue, it was able to close it partially as some of the commitments didn’t translate to fund infusion. As a result, the company floated the new offer. 

The development comes at a time when BYJU’S is fighting multiple legal cases in various courts in India and the US. Its disgruntled investors have argued that the company violated the NCLT’s February order.

In its latest order, the Tribunal also directed BYJU’S to file the complete details of the allotments made on March 2 before the increase of authorised share capital within 10 days. Besides, the court has also asked the company to disclose the complete details of the escrow accounts in which it is parking the funds raised via the rights issue.

During the hearing, the counsel for the investors also brought up the multiple trials that the company has been facing. Senior Counsel Sudipto Sarkar highlighted that while the Enforcement Directorate (ED) and Ministry of Corporate Affairs (MCA) are actively investigating the company’s affairs as of now, the company is also under scrutiny for syphoning $533 Mn from its $1.2 Bn Term Loan B lenders. 

Apart from these ongoing legal proceedings, the company is also facing an insolvency plea from OPPO Mobiles, the Board of Control for Cricket in India (BCCI), outsourcing firm Teleperformance Business Services, and IT service provider Surfer Technology. 

The post BYJU’S Rights Issue: NCLT Asks Edtech Giant To Maintain Status Quo On Shareholding appeared first on Inc42 Media.

In 2022, physics teacher Mayank Kumar moved from his home in Uttar Pradesh’s Bijnor to Kota in Rajasthan. An edtech unicorn offered him an annual package of INR 32 Lakh per year and free accommodation in Kota, renowned as the coaching centre capital of India.

Kumar, who taught physics to engineering aspirants, said several teachers like him made the journey from their home towns to coaching hubs in 2020–21 and even in 2022-23. Kota, in particular, became a battleground for teachers as edtech companies and other legacy players looked to on-board ‘star’ educators. 

“The salaries being offered touched sky-high levels and the teachers were literally being poached from local coaching institutes. Some friends of mine even became celebrities on social media and “crorepatis in no time,” he told Inc42.

The edtech poaching wars had also intensified as startups looked to compete with legacy coaching institutes in test prep space. Some teachers even earned as much as INR 1 Cr per year, as we reported back then. 

But the hype has now well and truly fizzled out. Academicians like Kumar have returned to their hometowns and are back on the job hunt as edtech startups cut costs across the board. “Today, even annual pay of INR 10 Lakh is good enough,” Kumar says. 

50% Decline In Edtech Salaries

Data sourced from talent recruitment firms Xpheno and CIEL HR Services shows that the salaries of most key edtech roles across various departments have seen as much as a 50% drop from the highs of 2020-2021.

“The salary packages in edtech have since 2022 undergone corrections and calibrations to return to normalised scales. The workforce optimisation and continued cost shedding has seen job offer packages shrink by 30% to 80% compared to the previous high of 2021 and early 2022,” Prasadh MS, Workforce Research and Communications Specialist at Xpheno said. 

Since the peak of edtech funding in 2021, startups have had to pivot to hybrid models from online-only learning. The pivots forced startups to review the high employee costs and other customer acquisition spends. 

The cash crunch due to lack of growth on the online learning front resulted in nearly 15,000 layoffs and dozens of shutdowns. Startups such as Lido, Udayy, SuperLearn, DUX Education, Frontrow, Crejo.fun among others shut down operations. 

“As projections over commercial prospects for the sector spiked and valuations climbed, edtech ventures went all out to hire and hoard talent at high costs to create capacity for expansion. The overall buoyancy in hiring across sectors saw offer packages grow and multiply in value and volume,” Prasadh added.

According to Inc42 data, edtech startups raised a mere $283 Mn in 2023, compared to $2.4 Bn in 2022 and $4.73 Bn in 2021.

Notably, edtech unicorns like BYJU’S, Unacademy have accounted for a majority of the layoffs, with both giants having to scale back in verticals. The layoffs meant increased the talent supply in the edtech market with thousands of job seekers now ready to work at 50%-60% lower salaries than what they drew before. 

Salary Corrections Across Edtech Roles

BYJU’S problems are well publicised and Inc42 has also reported exclusively on the startup rejigging its hiring strategy specifically from a cost perspective. Besides this, even Unacademy is reviewing costs associated with its sales team, as we reported. 

Even as hiring remains muted, recruitment firms say it has not come to a total halt. When it comes to sales or business development (BD) functions salaries have seen nearly 80% drop. 

Aditya Narayan Mishra, CEO of CIEL HR, believes that the companies are extending their runway by cutting costs wherever possible. “Secondly, the talent market has understood the ground reality and is open to salary rationalisation; salary expectations of candidates while changing jobs have significantly come down as well. These dynamic forces have been able to support the new benchmarks in salaries,” he added.

Besides this, salary packages in finance have dropped by 30%-50%, whereas marketing roles are seeing offer letters with 40%-60% lower salaries, according to data shared by Xpheno. Similar drops have been observed in salary for teachers, engineering roles and sales. 

Prasadh added that this much needed rebalancing and correction has stabilised talent costs in the edtech sector for now and hiring has come down to record lows. “At the peak of the buoyancy, we had edtech players rolling out offers that were highly competitive and clearly to gain an edge over the offers that IT services and SaaS players were rolling out.”  

In particular, salaries for front-end engineers, one of the most in-demand roles in edtech, have seen more than 70% drop since 2021. As the slowdown in edtech began, front-end engineers were being paid around INR 12 Lakh to INR 26 Lakh per year in 2022, which has now dropped to INR 10 Lakh to INR 18 Lakh per year.

“At one point, BYJU’S, which has seen huge value erosion, was called a workforce giant with a strength of 50,000 employees paying very good packages, enviable bonuses which raised the bar in the industry. However, as companies like BYJU’S collapsed, so did the high salary trend and talent demand throughout the industry,” the founder of a skill development startup added. 

Edtech Salaries To Remain Flat?

Far from the over-optimism that the founders and investors placed on online only mode of learning, a hybrid model across K-12, test preparation and upskilling verticals is now assuming significance. Edtech firms like Unacademy, Physics Wallah, BYJU’S owned Aakash have in fact strengthened their offline business models which now contribute to a major portion of revenues. 

Other edtech startup founders also agreed that there is an industry-wide correction going on. “This shift is largely due to limited funding and an increased focus on revenue and profitability. Startups are placing the right value on talent and normalising the previous ‘pay highs’ and include variable pay components linked to the performance,” according to Anil Nagar, CEO of test prep platform Adda247. 

The Adda247 founder added that the changes reflect a more sustainable and stable approach within the industry, ensuring long-term growth and success for both companies and employees.

Recruitment experts say annual compensation or increments will not see a significant increase for the next few quarters. As layoffs continue, salaries will remain flat. “The negotiation bandwidth on new offers has returned to the 25%-35% range and in line with the pre-pandemic period,” Xpheno’s Prasadh said. 

It’s been a challenging time for edtech startups in the past two years, but there is also some optimism that the pain will give way to fortunes in the long run. “We see a silver lining on the horizon. One of our recent studies among startups shows that 65% of companies are planning to increase hiring in the coming 6 months [July-Dec],” CIEL HR’s Mishra added.

[Edited by Nikhil Subramaniam]

The post Edtech Startup Salaries Plummet By 50% In 2024 As Deep Cuts Continue appeared first on Inc42 Media.

In a significant development in the complex bankruptcy proceedings involving a subsidiary of BYJU’s, a federal judge has offered to drop the arrest order for a Florida hedge fund manager, provided he assists in locating $533 Mn that the Indian edtech company is accused of attempting to conceal.

During a court hearing in Wilmington, Delaware, on Tuesday, US Bankruptcy Judge John Dorsey agreed to rescind the arrest warrant for William C. Morton, the founder of Camshaft Fund.

According to court records, BYJU’S had invested $533 Mn of loan proceeds with the fund last year, Bloomberg reported.

The money was subsequently transferred to a UK lender and then to an unnamed, non-US entity affiliated with BYJU’S.

Lenders are attempting to use the bankruptcy case of a US-based BYJU’s unit to recover the funds.

Judge Dorsey ordered Morton, who appeared at the hearing via video from Dubai but did not speak, to return to the US and meet with lawyers representing BYJU’s lenders within 10 days. If Morton, whom the judge accused of fleeing the US to avoid questioning, fails to comply, Dorsey warned that the arrest order would be reinstated.

The missing $533 Mn is central to a heated dispute between lenders, who are owed $1.2 Bn, and the edtech startup founded by entrepreneur Byju Raveendran.

The money in question is linked to BYJU’S Alpha Inc., a bankrupt shell company affiliated with Think & Learn. This shell company was taken over by the lenders after a loan defaulted. The lenders are now leveraging the bankruptcy case of BYJU’S Alpha Inc. to recover the missing cash.

Last month, Riju Ravindran, brother of BYJU’S founder and CEO Byju Raveendran and a director at Think & Learn Pvt Ltd, was found in contempt of court at a show cause hearing on May 20, 2024, in the United States Bankruptcy Court for the District of Delaware.

Judge John T. Dorsey issued the ruling following Ravindran’s repeated refusal to disclose or ascertain the whereabouts of $533 Mn in term loan proceeds transferred from BYJU’s Alpha, Inc.

In making its ruling, the court found that Riju Ravindran’s testimony “lacks all credibility,” stating that he either knows where the $533 Mn in term loan proceeds is being hidden and will not disclose it, or he did not attempt to find out the location.

Earlier this year, BYJU’S foreign lenders, who jointly provided over 85% of the company’s $1.2 Bn Term Loan B (TLB), filed an insolvency petition with the Bengaluru bench of the National Company Law Tribunal (NCLT) against the startup.

The Chennai bench of the National Company Law Appellate Tribunal (NCLAT) recently dismissed an appeal petition filed by four foreign investors of troubled edtech startup BYJU’S.The appeal was filed against the NCLT April 23 order, in which the Tribunal declined to issue an injunction against BYJU’S for allegedly violating its earlier directives.

BYJU’S net loss surged 81% YoY to INR 8,245.2 Cr (close to $1 Bn) in FY22 even as operating revenues also rose over 120% to INR 5,014.6 Cr during the year under review, largely on the back of coaching arm Aakash.

The post BYJU’s Bankruptcy Case: US Court Pushes To Retrieve ‘Missing’ $533 Mn appeared first on Inc42 Media.

Edtech startup PhysicsWallah cofounder and CEO Alakh Pandey has reportedly filed a public interest litigation (PIL) before the Supreme Court (SC) seeking a probe into allegations of discrepancies in pan-India medical entrance test, NEET-UG 2024.

As per Economic Times, Pandey has sought a probe into the matter by an independent panel. At the heart of the issue is the grace marks awarded by the National Testing Agency (NTA) to more than 1,500 students and allegations of paper leak. 

Citing a statement by the edtech startup, the report said that only a thorough investigation can reveal the issues and “irregularities undermining the credibility” of the medical entrance test. He also reportedly urged the SC to order a re-examination of this year’s medical test.

In a post on X, Pandey said, “… I believe in the court and our judiciary system. Our students will get justice.” 

In a separate petition filed before the Supreme Court in connection with alleged irregularities in NEET 2024, a vacation bench comprising Justice Vikram Nath and Justice Ahsanuddin Amanullah on Tuesday (June 11) issued a notice to NTA but refused to stop the post-exam counselling for the exam. 

The plea alleged that the exam (held on May 5) was conducted amid malpractices, including paper leaks.

“Furthermore, recognising the impending commencement of the counselling process for the allocation of medical seats based on the contentious NEET rankings, Mr. Pandey and Mr. (J Sai) Deepak beseeched the Hon’ble Supreme Court to stay the counselling proceedings… This stay is imperative to prevent further prejudice against the aggrieved candidates and to maintain the integrity of the admission process pending the resolution of this grave matter,” PhysicsWallah added in its statement. J Sai Deepak is Pandey’s lawyer in the case,

Meanwhile, the testing agency has denied the allegations and said that there were no irregularities in conducting the exam.

This comes amid various allegations of discrepancies in the results of NEET (UG) 2024, which were declared on June 4. While concerns have primarily been raised about the allocation of grace marks to some candidates, a section of students has also alleged that the first rank was awarded to some 67 candidates, of which six were from the same centre in Haryana. 

“Out of the 67 candidates who got 720/720 marks, 44 are on account of the revision in one answer key of Physics and 06 are on account of compensatory marks for loss of time,” the NTA said in a statement. 

The post NEET 2024: PhysicsWallah CEO Alakh Pandey Moves SC, Seeks Probe In Award Of Grace Marks appeared first on Inc42 Media.

Unacademy’s partner Sumit Jain is reportedly set to replace the edtech startup’s cofounder and chief technology officer Hemesh Singh, who last week announced his transition to an advisory role, on its board of directors. 

Singh is expected to move to the United States and will have an advisory role at the company for 6-12 months, The Arc reported.

Meanwhile, Jain joined Unacademy in April 2020 and is currently one of the partners there. He, primarily, is the founder and chief executive officer of Graphy, a subsidiary of the edtech company. 

Inc42 has reached out to Unacademy seeking a comment on the development. The story will be updated based on the response.

As per Jain’s LinkedIn profile, he is an investor in Unacademy, and about 25 other startups, including financial services company Fisdom, online music school Topbeat and social application Slick.

He has also founded and led a few other companies as CEO, including Opentalk and CommonFloor.com. Online classifieds platform Quikr acquired CommonFloor.com in January 2016. Jain has a cumulative experience of nearly two decades in the tech industry.

Last week, Singh announced his decision to take a back seat after being with the edtech startup for more than eight years. He took to social media platform X to announce his transition to an advisory role.

“After almost a decade of building Unacademy with @gauravmunjal and @romansaini, I have decided to move from an executive role to an advisory role,” he said in a post.

“It has been a wonderful ride and I am extremely grateful to have been a part of this journey. We did change the Test Prep Industry for good,” he added.

Singh along with Gaurav Munjal and Roman Saini founded Unacademy in 2015. The Bengaluru-based company claims to have a network of 91K registered educators (teachers) and over 99 Mn learners.

The Peak XV Partners-backed edtech startup narrowed its consolidated net loss by almost 40% to INR 1,678.1 Cr in the financial year 2022-23 (FY23) from INR 2,847.9 Cr, a year ago, on the back of a sharp reduction in costs.

The post Unacademy Partner Sumit Jain To Replace Cofounder Hemesh Singh On The Board appeared first on Inc42 Media.

Unacademy’s cofounder and chief technology officer Hemesh Singh has decided to take a back seat after being with the edtech startup for more than eight years. 

Singh took to social media platform X to announce his transition to an advisory role.

“After almost a decade of building Unacademy with @gauravmunjal and @romansaini, I have decided to move from an executive role to an advisory role,” he said in a post.

“It has been a wonderful ride and I am extremely grateful to have been a part of this journey. We did change the Test Prep Industry for good,” he added.

As per his LinkedIn profile, prior to Unacademy, Singh worked with the company’s chief executive Gaurav Munjal at Flatchat, a mobile-based platform that helps students and bachelors find accommodation and flatmates, for more than a year.

“Hemesh and I started working together 11 years ago when we were building Flatchat. It had been a crazy ride and I have been grateful to have a co-founder like you,” said Munjal.

Singh along with Munjal and Roman Saini founded Unacademy in 2015. The Bengaluru-based company claims to have a network of 91K registered educators (teachers) and over 99 Mn learners.

In January, the company appointed CRED’s head of finance Pratik Dalal as chief finance officer of its offline business – Unacademy Centres.

It is pertinent to note that the extended funding winter, macroeconomic pressures, tightening business margins and absurd unit economics posed several challenges for Indian startups, triggering all-scale business restructuring and retrenchment, shutdowns and even exodus at top leadership roles.

For instance in May, fintech major Paytm’s chief operating officer Bhavesh Gupta resigned from the company. Similarly, logistics unicorn Delhivery’s chief business officer Sandeep Kumar Barasia tendered his resignation, both citing personal reasons. 

On the other hand, Karthik Gupta, CFO of Ola Cabs’ parent ANI Technologies also resigned from his position.

Most startups and companies are in the squeeze to innovate and launch new products and services in order to attract larger funds and to save their valuation price. On that note, Unacademy has begun experimenting with language learning and launched an application to learn Spanish, in June.

The company is also planning to add French to the app, while more global and Indian languages are on the list to be included in future.

The Peak XV Partners-backed edtech startup narrowed its consolidated net loss by almost 40% to INR 1,678.1 Cr in the financial year 2022-23 (FY23) from INR 2,847.9 Cr, a year ago, on the back of a sharp reduction in costs.

The post Unacademy Cofounder Hemesh Singh Quits, Moves To Advisory Role appeared first on Inc42 Media.

Study abroad startup Leverage Edu, which counts the likes of Blume Ventures and DSG Consumer Partners among its backers, has completed its second ESOP buyback programme.

However, the company did not disclose the amount of the stock  buyback.

More than 50 current employees across various departments were able to reap the benefits from this exercise.

Leverage Edu marked completion of its first ESOP buyback in June 2022.

“A large majority sold less than a quarter of their vested shares, and some didn’t sell at all. That, by far, gives me incredible belief re the culture we’ve built, and the confidence we collectively have in our ability to build a great business, than anything else! In fact it makes me want to do another round of ESOP rollout across the company,” said Akshay Chaturvedi , founder and chief executive of Leverage Edu.

The company said in a statement that the ESOP buyback marks a milestone in Leverage’s journey, emphasising its commitment to empowering its workforce and sharing success.

Founded in 2017, Leverage Edu is a study abroad platform that helps students apply to foreign universities. It offers courses across three apps – Study Abroad With Leverage Edu, LeverageIELTS, and the recently launched LeverageTOEFL.

This follows months after the startup saw its loss widen by 118% to INR 102.8 Cr in FY23 from INR 47.1 Cr in the previous fiscal year, due to increased expenses aligned with its expanding business. 

Despite this, the startup’s operating revenue surged 3.3X to INR 68.9 Cr in FY23 from INR 21 Cr in the previous fiscal year.

In September last year, Leverage Edu secured undisclosed funding from the Thailand-based family office of Aloke and Suchitra Lohia to extend its presence in the Southeast Asian market, particularly in Thailand. 

This funding round followed closely on the heels of the startup’s $40 Mn Series C funding round led by language testing conglomerate ETS, which took place just two months prior. 

The post Leverage Edu Rolls Out Second ESOP Buyback appeared first on Inc42 Media.

The Chennai bench of the National Company Law Appellate Tribunal (NCLAT) has dismissed an appeal petition filed by four foreign investors of troubled edtech startup BYJU’S. 

The appeal was filed against the National Company Law Tribunal’s (NCLT) April 23 order, in which the Tribunal declined to issue an injunction against BYJU’S for allegedly violating its earlier directives. 

As per Moneycontrol, the NCLAT noted that it was inclined to dismiss the plea as the investors had already filed a contempt petition against the edtech major for violations. While refusing to intervene, the appellate tribunal added that the NCLT itself will pass an order on the matter.

“We cannot issue an order on a matter that is yet to be decided by NCLT… We cannot substitute the actions of NCLT,” remarked the NCLAT. 

Meanwhile, sources at BYJU’S said that the NCLAT told the investors, “You cannot misuse the appellate jurisdiction… You cannot approach us for any order issued by the NCLT. We only get involved if and when a substantial right has been violated”.

Arguing before the NCLAT, BYJU’S counsel contended that investors had not formally filed an application regarding the alleged breach of the interim order by BYJU’S. 

“They haven’t even filed a petition for contempt in the NCLT and yet, they have come here to argue as if the NCLAT must suo moto take it up for hearing,” the edtech’s counsel argued.

The story traces its origins to February 2024, when reports surfaced that the edtech major was looking to undertake a rights issue at a 99% valuation cut. Fearing the erosion of wealth, the investors organised an extraordinary general meeting (EGM) to oust promoters Byju Ravendran, who is also the CEO, and his family from the helm of affairs at the edtech giant. 

After the EGM and rights issue went ahead amid legal back and forth, the investors banded together and filed a plea before the NCLT alleging oppression and mismanagement within the company.

In its petition, the four investors (Peak XV Partners, General Atlantic, Chan-Zuckerberg Initiative and Prosus) claimed that the edtech startup was using some of the funds raised via the $200 Mn rights issue, in contravention of the Tribunal’s order to maintain status quo with regards to the shareholding. 

The investor plea also claimed that BYJU’S had not deposited the money it received from rights issue prior to February 27 in the escrow account. 

However, the company denied any wrongdoing. 

The latest development comes at a time when BYJU’S has been fighting on multiple fronts amid an increasing number of legal cases and insolvency proceedings, mass layoffs, a looming debt crisis, and valuation markdowns. 

Just a day ago, a clutch of the edtech’s Term Loan B (TLB) creditors initiated insolvency proceedings against three of the edtech giant’s guarantors for the loan in the Delaware district bankruptcy court.

The post NCLAT Dismisses Appeal Petition Of Investors Against BYJU’S, Ball Now In NCLT’s Court appeared first on Inc42 Media.

Cash-strapped BYJU’S has reduced the fixed pay for new sales hires by a massive 90%, multiple sources said, after linking salaries of sales staff to their performance last month. 

Inc42 has reviewed offer letters offered to various inside sales associates in the past few weeks and the overall compensation being offered to inside sales associates is INR 4 Lakh per annum, which includes variable pay. The offer letters show fixed pay of INR 1.15 Lakh per annum, and variable pay (performance-linked) as a maximum of INR 2.8 Lakh per year. 

This effectively means that the in-hand salary of inside sales associates every month will be close to INR 10,000, compared to INR 35,000-INR 40,000 for the same profile till December 2023. 

BYJU’S has several openings for inside sales associates on its website, where it mentions the annual gross salary as INR 4 Lakhs, but this does not clearly state that the bulk of the salary is dependent on sales performance. 

In comparison, just six months ago, the Inside Sales Associate job postings on platforms such as LinkedIn mentioned annual compensation of INR 7 Lakhs, with INR 4 Lakh as fixed pay. Essentially both fixed and performance-linked variables have been reduced in the new offer letters.

When it comes to Business Development Associates (BDAs), BYJU’S has reduced the annual gross salary from INR 10 Lakh in late 2023 to INR 7 Lakh now. This includes INR 4 Lakhs per year as fixed pay and the rest as variables. as per the company website.

BYJU’S Goes Heavy On Cost-Cutting

The changes in the hiring budgets come amid the edtech giant’s push to get leaner under the BYJU’S 3.0 programme as we reported earlier. As part of this, last month, cofounder and CEO Byju Raveendran told 1,500 sales associates and managers that the company is moving to a performance-linked salary model under which monthly pay-outs would be linked to the sales brought in. The CEO also hinted that this could become the new way forward for the BYJU’S sales team, instead of a short experiment for May. 

In line with this, the company is said to have paid the May 2024 salaries of sales employees from the revenue collections it made in the month. 

However, BYJU’S still has salary and last due obligations for thousands of its former and current employees. This includes those who were let go in February and March 2024, as well as PF contributions for some of these employees for the months prior to their dismissals. 

BYJU’S had earlier claimed that it expects to clear all PF dues by June, but thus far, there has been no progress on that front. 

It remains to be seen whether the company continues its performance-linked pay system for June and the months ahead. Even though going by the annual pay offered to new hires, that seems to be the case. 

The company did not respond to Inc42’s questions on the new pay scale for sales hires. The story will be updated if and when the company responds. 

Besides cost cutting, BYJU’S is looking to push its sales numbers by lowering the prices of its courses. Sources further added that across the board there has been a 30-40% drop in pricing under this change.

It has significantly slashed the prices of various products including the BYJU’S Learning app subscriptions, tuition fees for BYJU’S Tuition Centres as well as the fees for online courses. 

BYJU’S has also integrated the educators team for online classes and BYJU’S Tuition Centre verticals. It has also hired educators at lesser salaries who now teach in a hybrid mode, as we reported in late April. 

Meanwhile, the company is still stuck in a legal tangle with its investors, vendors, and lenders. Raveendran, who is currently in the UAE (as per speculations), has shown a lot of optimism about turning things around, but the state of hiring and the low budgets paint a grim picture of austerity at BYJU’S. 

Harpreet Singh Saluja, president of the Nascent Information Technology Employees Senate or NITES, told Inc42 that BYJU’S new salary structure is a glaring example of capitalism gone wrong. He added that a fixed salary of INR 1.15 Lakhs is simply not enough to live on in many Indian cities. 

“With low salaries and uncertainty around bonuses, employees are in a tough spot financially. This race to the bottom in pay hurts everyone. It discourages talented people from working in such firms and pushes them to look for jobs in other countries. The government needs to take stricter measures to ensure companies adhere to minimum wage guidelines and offer fair compensation to workers,” Saluja added.

The post BYJU’S Slashes Salaries For New Sales Hires By More Than 90% appeared first on Inc42 Media.

Months after Unacademy announced its foray into the language learning space, the edtech startup’s CEO Gaurav Munjal said that ‘Unacademy: Learn a language (ULL)’ app is now live on Google Play Store and Apple app store.

To begin with, users can learn Spanish on the app. However, the startup plans to add more languages to the app soon, Munjal said in a post on social media platform X. 

He said that the next language to be added on the app will be French. Besides, users would also be able to learn Indian languages like Kannada and Marathi going ahead.

“We’ve distilled the essence of learning Spanish from English into compact, crisp lessons designed for profound understanding. Our interactive templates make learning an adventure, with amazing content ensuring a seamless grasp of language concepts,” the app’s description on Play Store reads. 

Users can learn the language via free templates that gamify the learning process. To begin with, users are required to choose Spanish words that can complete sentences, then match words with their English counterparts. 

Further, the app also drops in some facts about the language amid such tasks so that the users can make better sense of what is being communicated in the language. Post a basic understanding of the language, users can also learn how to communicate in Spanish in everyday situations.  

“While all other Apps focus on too much Gamification, we built an App that actually makes you learn a Language,” Munjal said in his post.

Although the app is free to use, it gives users access to a limited number of free lessons per day. Further, access to all chapters is also restricted. Users will need to get ‘Unacademy PRO’ subscription, costing INR 4,999 for a year and INR 790 for a month, to access more chapters. 

Some users pointed out on Munjal’s post that the cost of the subscription is much higher than direct competitor Duolingo, whose subscriptions are set at INR 1,800 per year. 

“Unless Unacademy has an exponentially better learning mechanism, it’s hard to justify the price difference,” a user said. To this, the CEO said that the company is looking to figure out the right pricing for the app and will change them accordingly. 

Despite the price point, Munjal claimed that the app crossed 10,000 users and 100 paid customers within 14 hours of launch. The app has over 5,000 downloads on Play Store. 

The startup’s language learning adventure adds on to its recent bid to expand its product portfolio. It launched UnacademyX, an app which gamifies UPSC and NEET prep, in May 2023. 

Like many other startups, Unacademy is also looking to shore up its revenue and cut loss. This has resulted in it laying off many employees. Last month, the unicorn’s medical entrance test prep platform PrepLadder laid off around 145 employees. 

Not only this, Inc42 recently reported that the edtech major revised its hiring terms for sales executives even after they received their offer letters. Many candidates were made to take a 7-day training and fired thereafter.

Unacademy saw its consolidated net loss decline almost 40% to INR 1,678.1 Cr in the financial year 2022-23 (FY23) from INR 2,847.9 Cr in the previous fiscal. Operating revenue rose 26% to INR 907 Cr in FY23 from INR 719.2 Cr in the previous fiscal year.

The post Unacademy Launches App To Learn Spanish, Plans To Add More Languages appeared first on Inc42 Media.

In more problems for embattled edtech startup BYJU’S, the ad hoc group of lenders of its Term Loan B has initiated insolvency proceedings against three of the edtech giant’s guarantors for the loan in the Delaware district bankruptcy court.

In a statement, the lenders said they have filed petitions under Chapter 11 of the US Bankruptcy Code to initiate involuntary Chapter 11 proceedings against Epic!, Neuron Fuel, and Tangible Play, the three US-based guarantors for the Term Loan B availed by BYJU’S beleaguered subsidiary, BYJU’S Alpha.

Involuntary bankruptcy cases require a company to put itself into court protection or fight the creditors in court. Redwood Capital Management, Veritas Capital and loan agent Glas Trust filed the latest petition, Bloomberg reported citing court papers.

“Since BYJU’S began to default on its Term Loan obligations shortly after we provided BYJU’S Alpha with financing in 2021, we have made every effort possible to work productively and collaboratively to help BYJU’S cure its multiple defaults. However, it is clear that BYJU’S management has no intention or ability to honour its obligations under the Term Loans,” the ad hoc group said in the statement.

It again alleged that BYJU’S founders Byju Raveendran, Riju Ravindran, and Divya Gokulnath unlawfully ‘diverted’ $533 Mn in loan proceeds, which is still being contented by the edtech giant in a Delaware court.

The lenders added that the move to file Chapter 11 petitions was to ‘protect and preserve’ the value of Epic!, Neuron Fuel, and Tangible Play. 

“We remain committed to their success and stand ready to infuse the capital necessary to reorganise the businesses. Under [the] supervision of the court, the lenders hope that Epic!, Neuron Fuel, and Tangible Play will benefit from much-needed oversight…,” the lenders added.

The lenders have also created a website, inviting former employees, students and vendors of Epic!, Neuron Fuel, and Tangible Play to anonymously share their experiences, including whether they are owed any outstanding debt, in dealing with the three businesses and their leadership.

Inc42 has reached out to BYJU’S seeking its comment on the latest development. The story will be updated upon receiving a response from them. 

The development comes one day after the US-based asset management firm Baron Capital reduced the fair value of its investment in the edtech firm BYJU’S by 99.85%. The move from the ad hoc group of lenders also comes after they sought directions from the National Company Law Tribunal (NCLT) in May to restrain the edtech from pledging, selling or transferring shares.

The Case Of The $533 Mn

Since court proceedings began in Delaware in March 2023, the ad hoc group of lenders have accused BYJU’S founders of moving out $533 Mn from the loan proceedings to an unknown location. 

In February 2024, BYJU’s Alpha filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the District of Delaware, including to investigate and resolve claims related to the $533 million in missing loan proceeds.

The lenders and the company continue to be involved in the legal battle about where the $533 Mn has been parked. In May this year, the Delaware Court found Riju Ravindran to be in contempt following his repeated refusal to disclose or ascertain the location of the $533 Mn in loan proceeds.

The post BYJU’S Term Loan B Saga: Now, Lenders Initiate Bankruptcy Proceedings Against Epic!, Other Guarantors appeared first on Inc42 Media.

US-based asset management company Baron Capital Group has significantly reduced the fair value of its investment in the edtech firm BYJU’S by 99.85% to $120 Mn as of March 31, 2024.

Baron Capital, holding 15,334 shares through the Baron Emerging Markets Fund and 9,201 shares via the Baron Global Advantage Fund, has valued its investments in BYJU’S at $75,485 and $45,294, respectively.

This drastic reduction aligns with a broader concern regarding BYJU’S valuation, which has fallen significantly from its peak valuation of $22 Bn in October 2022. Earlier in the year, the edtech firm raised $200 Mn in the rights issue, when the company reportedly had a valuation in the range of $20-$25 Mn.

In its latest quarterly filing, the US-based investment firm has also recognised a final write down of its investment in BYJU’S.

Earlier in January, another US-based asset manager, BlackRock slashed its valuation of edtech major BYJU’S by around 95% from $22 Bn to $1 Bn. However, it is to be noted that this valuation was before the rights issue.

Amid the ongoing trouble, the edtech major reportedly “significantly” slashed the prices of its products and revamped its sales model. The firm has reduced the annual subscription for BYJU’S Learning App to INR 12,000, while BYJU’S Classes and offline BYJU’S Tuition Centres (BTC) courses are now priced at INR 24,000 and INR 36,000, respectively.

The company also announced a leaner structure and consolidated some of the verticals under its BYJU’S 3.0 initiative.

The edtech major has been grappling with fires on multiple fronts, including a looming debt crisis, impending mass layoffs, delayed salaries, a cash crunch and a bevy of legal and insolvency cases filed by its investors and vendors.

Meanwhile, after BYJU’S only partially paid employee salaries in February and March, the company reportedly processed full salaries for the month of May on June 3. This marks the second consecutive month employees have received their full salaries.

The post Baron Capital Slashes BYJU’S Valuation By 99% appeared first on Inc42 Media.