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May 2, 2024

Byju’s Implements Revenue-Linked Salary Policy Amid Financial Strains: Report

Byju’s, the embattled edtech company, has recently introduced a revenue-linked salary policy for its sales staff, as reported by CNBCTV18. This new policy, effective from April 24 to May 21, aims to address the company’s financial strains by incentivizing sales performance.

Under this policy, base salaries for sales team members are suspended during the specified period. Instead, half of the weekly revenue collection will be distributed to sales associates every week. This move comes at a critical time for Byju’s, which has been facing challenges in disbursing salaries and accessing funds.

In April, the company announced its intention to borrow money to meet pending salary payments due to difficulties in accessing rights issue funds, compounded by actions from foreign investors. Byju’s has been entangled in legal disputes with investors at the National Company Law Tribunal (NCLT) over allegations of oppression, mismanagement, and the use of rights issue funds. The NCLT recently deferred hearings in these matters to June 6, impacting the company’s ability to address its financial obligations.

Byju’s had hoped to utilize the rights issue funds to sustain its daily operations and cover the salaries of its 15,000 employees. However, the NCLT’s decision has hindered these efforts, exacerbating the company’s financial woes. The total salary expenditure for Byju’s is estimated to range between Rs 40 crore and 50 crore, highlighting the significance of the ongoing financial challenges facing the edtech giant.

The new revenue-linked salary policy applies to the Inside Sales and Byju’s Exam Prep teams, aiming to further incentivize their performance during this challenging period. By linking compensation directly to revenue, Byju’s hopes to motivate its sales staff to maximize their efforts in generating revenue, which is crucial for the company’s sustainability amidst its financial difficulties.

In addition to addressing immediate financial concerns, this policy may also serve as a strategy to retain and motivate sales employees amid the uncertainty surrounding the company’s financial situation. By directly tying compensation to revenue, employees are likely to feel more invested in the company’s success and motivated to contribute to its growth.

While the implementation of a revenue-linked salary policy may provide short-term relief for Byju’s, the company still faces significant hurdles in resolving its financial issues. The outcome of the NCLT hearings and the availability of funds will heavily influence the company’s ability to navigate through these challenges and sustain its operations in the long term.

In conclusion, Byju’s revenue-linked salary policy reflects its efforts to address financial strains and incentivize sales performance amid ongoing challenges. However, the company’s future remains uncertain as it grapples with legal disputes and funding issues, highlighting the complex landscape of the edtech industry.

Jhumpa Lahiri

Jhumpa Lahiri

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