Financial Struggles and Mass Layoffs: Byju’s Terminates 500 Employees Amidst Payroll Crisis

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Byju's dismisses 500 employees via phone call, cuts down almost half of its Tuition Centre workforce

Only a few days post their inability to meet the payroll, Byju's has now unexpectedly terminated around 500 employees. The majority of these employees were from its Tuition Centre department.

The problems for Byju's, the beleaguered edtech firm, look set to continue. News emerged recently that the company was struggling to pay its staff due to a lack of funds. Now, it's being reported that they have allegedly let go of around 500 workers, mainly those in sales and marketing positions across different departments.

Once again, these job cuts are happening due to difficulties in obtaining funds for daily operations, as per a report from the Economic Times, who cited sources knowledgeable about the situation.

Additionally, the firm is dismissing its staff through phone calls and releasing them without giving any prior notice, as per the sources quoted by Moneycontrol.com.

Around 240 of the dismissed workers were involved in Byju's Tuition Centre activities, while the rest were working in its wider business sectors concentrating on K-10 education and test preparation.

Insiders have disclosed that job cuts were due to financial difficulties and were carried out after determining less productive employees over a span of two months. However, unlike usual procedures, the impacted workers were not subjected to any performance enhancement plan and were not provided any prior warning.

A company representative disclosed that they are in the concluding phase of a business reorganization process aimed at streamlining operational structures, cutting down expenses, and enhancing the management of cash flow.

In September of the previous year, it was reported that the company based in Bengaluru planned to cut its workforce by about one-third, roughly 4,000-4,500 employees, in an effort to further reduce expenses.

Job cuts were announced a day following a note sent to staff on Monday. The note explained that their paychecks would be postponed because of measures taken by disagreeing investors, which have restricted the access to funds through a share rights issue.

Workers have been promised internally that all outstanding wages, which includes a large part of February's salary and the entire March payment, will be settled by April 8.

The National Company Law Tribunal (NCLT) in Bengaluru recently refused to stop Byju's exceptional general meeting (EGM) planned for March 29. The meeting was set to expand its approved share capital to make room for a $200-million rights issue.

The company is offering the rights issue at a 99% discount compared to its highest valuation of $22 billion. Investors who choose not to participate in this funding round will see a decrease in their ownership percentage after the rights issue is finalized.

Byju's spokesperson voiced hope on Tuesday that, with the backing of most investors for the $200-million rights issue, the company would successfully navigate through the regrettable job cut circumstance.

(Incorporating information from various sources)

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