Just a couple of months after having a bitter fallout with Unacademy-owned PrepLadder, a group of teachers has decided to move the Delhi High Court (HC) against the organisation for nonpayment of dues, in another instance of mounting troubles for the SoftBank-backed edtech unicorn.
Dr. Vivek Jain, a PrepLadder teacher of preventive and social medicine, sued the company in December for nonpayment of royalty fees. Dr. Jain and a few other doctor-teachers have not been paid for their content sold on the PrepLadder platform since September, when they decided to revoke their contracts for the year beginning April 2023 due to slashed paycheques and allegations of cheating. PrepLadder, on the other hand, has continued to sell the content on its platform while suspending payments to these teachers.
However, a person close to Unacademy had told Moneycontrol in November that the payments were disputed as the company was awaiting a response to the notice sent to employees for their lack of content contribution.
Dr. Jain’s case was first heard by the Delhi High Court on December 23, according to people familiar with the matter. Both parties—Dr Jain and PrepLadder—agreed to conciliation, but PrepLadder later refused, the people said, requesting anonymity. With PrepLadder declining conciliation, at least six more doctor-turned-educators have decided to file a complaint against the company, the people added.
Dr. Jain's case had its second hearing on January 11. PrepLadder has requested a couple of weeks to file their reply, and the matter is now scheduled for February 1. Moneycontrol reached out to Dr Jain, but he refused to comment on the matter since it is sub judice. Unacademy declined to comment.
“Teachers have already hired a law firm in Delhi to take the matter ahead. In November only we had decided to take them to court, but we were waiting to see if they (PrepLadder) would have a change of mind,” said one of the people quoted above.
“They had stopped our payments illegally since November itself. Everyday we read about Unacademy trying to cut costs but that doesn’t mean they have to illegally stop payments of contracted educators,” the person added.
Moneycontrol reported in November that the online learning platform for NEET PG exams had come under fire amid a mass exodus of doctor-turned-educators due to pay cuts. These teachers also accused PrepLadder, which accounts for nearly a fifth of Unacademy's total revenue, of cheating.
Following Moneycontrol's story, several teachers who were named as replacements for outgoing teachers withdrew their applications, according to sources. Additionally, some teachers were recruited by Allen for the next year, resulting in a shortage of active faculty members at PrepLadder.
“This is a very small circle as soon as the story was out, many teachers who applied withdrew their applications. Many were poached by Allen. More importantly, teachers who have been poached by Allen for next year, have stopped getting their payments too,” a source with direct knowledge of the matter said.
“Even these teachers are now planning to take legal action against the company. PrepLadder, in fact, has very few teachers left currently and for a couple of subjects, the case is such that one teacher is teaching two subjects, which is unheard of, at least for tests like NEET PG,” the source added.
PrepLadder, which was founded in 2015 by Deepanshu Goyal, Sahil Goyal, and Vitul Goyal, offers recorded content for medical students preparing for the NEET PG exams.
In FY22, PrepLadder generated revenue of approximately Rs 115 crore and incurred a net loss of Rs 144 crore. The company is the only acquisition of Unacademy that contributed more than Rs 50 crore to its consolidated revenue. PrepLadder was acquired by SoftBank-backed Unacademy for $50 million in July 2020.
According to sources, PrepLadder's monthly sales took a hit in November due to the mass exodus of teachers. Moneycontrol reported that monthly bookings were 30 percent lower in the first 10 days of November compared to July.
As more educators leave PrepLadder or are recruited by other companies, the company's growth is expected to be impacted in upcoming quarters, further hindering the overall growth of the Unacademy Group.
A few months ago, Gaurav Munjal, the co-founder and CEO of Unacademy, expressed confidence in PrepLadder and had tweeted that the company held a 20 percent market share. He also stated that NEET PG students did not want to switch to offline learning. However, Munjal has since deleted the tweet.
Not just PrepLadder, Unacademy’s other acquisitions have also come under fire recently. In September last year, Moneycontrol reported how Relevel was alleged of unfulfilled promises by candidates. Earlier this month, the company decided to stop its core operations, which resulted in about 40 layoffs.
Unacademy has been trying to achieve company-level profitability and in September, Moneycontrol reported that the company was on track to achieve the feat by January 2023. In the process, it has undertaken close to 1,200 layoffs since the start of the year, reducing its headcount to half.
