BYJU’s Trims Costs, Vacates 4 Lakh Sq Ft Bengaluru Office Space
In an attempt to cut down on expenses, the edtech giant BYJU’S has exited approximately 400,000 square feet of office space at Prestige Tech Park located in Bengaluru. This move comes as the company seeks to streamline its operations amidst financial pressures.
BYJU’S had been shelling out a monthly rent of around INR 4 Cr for this particular office space. The lease agreement with Prestige Group, the property’s developer, was inked around 3.5 years ago. However, earlier this year, the rental agreement was brought to an end, with the deposit being adjusted to cover for rent dues that had not been paid. Moreover, this is not an isolated incident as BYJU’S is embroiled in disputes with various other property owners.
Adding to the company’s troubles, Kalyani Developers has issued a legal notice to BYJU’S over non-payment of rent for another significant office space spanning 500,000 square feet at Bengaluru’s Kalyani Tech Park. The owed sum represents ten months of unpaid rent. Of this, BYJU’S has settled seven months’ worth of dues by tapping into the security deposit held by the developer.
Juggy Marwaha, CEO of Prestige Office Ventures, commented on the situation. “We are leasing office space and always depend on our occupier’s business to flourish and grow. However, sometimes the headwinds of their own business make it difficult for them to fulfil their rental obligations. In this case, we tried our best to realign rents and give them some relaxation,” he explained. Despite these efforts, when rental payments could not be made on time, the security deposit was used to clear the pending amounts, and BYJU’S was formally asked to vacate the property.
Amidst these operational challenges, BYJU’S parent company, Think and Learn Pvt Ltd, has reportedly managed to secure a commitment of $300 Mn from investors to support its ongoing rights issue, which is anticipated to be wrapped up by the end of February. This fundraising effort marks a significant respite for the company as it had kicked off a rights issue in January aiming to gather $200 Mn through equity rights. The fundraising valued the company between $220-250 Mn.
BYJU’S has faced a series of hurdles over the past couple of years which includes skyrocketing losses, strategic business model challenges, investor disputes, and legal battles with creditors and vendors. Most notably, the company’s financial losses soared by 81% year-over-year to INR 8,245.2 Cr (approximately $1 Bn) in the fiscal year 2022. This was compounded by the underperformance of acquisitions like WhiteHat Jr, among others, further dragging down BYJU’S profitability. With total expenses for the fiscal year nearly doubling to INR 13,668 Cr, the company is under significant pressure to revamp its operations and steer towards financial stability.
