PhysicsWallah IPO: Slipper threats, mysterious odors flagged as biz risk

In one of the most bizzare disclosures, PhysicsWallah has flagged slipper threats, falling ceiling fans, and mysterious odors as potential risks in its Updated Draft Red Herring Prospectus (UDRHP) for the upcoming ₹3,820 crore initial public offering (IPO).

 

Among more conventional concerns like security breaches and harassment cases, the UDRHP highlights a 2023 incident where a student threatened a faculty member with a slipper over a video call. Another unusual risk cited involves a 2024 episode in which several students were hospitalised after exposure to an unidentified smell.

 

Stating student safety and security lapses as potential risks, the company noted that such incidents could negatively impact its reputation and business. The UDRHP lists several other mishaps, including a 2023 video showing a staff member pushing a student at an offline center, and a 2024 first information report (FIR) filed after a ceiling fan fell on a student at its New Delhi centre, alleging negligent conduct and endangerment of life.

 

'Negative publicity can hurt business'

“Student safety is becoming a key concern in our industry. In the past, students have faced harassment from peers or faculty members. While we have implemented safeguards to prevent physical harm, there is no guarantee that these measures will be fully effective, or that unforeseen events won’t result in injuries or other harm, which may adversely affect our reputation, business, and financial condition,” the company said in its UDRHP.

 

The company also highlighted that negative publicity around safety at offline centers could hurt enrollments and financial performance. Sharing the 2024 incident where an unidentified odor in a classroom led to evacuation and hospitalisation of a few students, PhysicsWallah noted, “No assurance can be provided that such accidents or safety breaches will not occur in the future.”

IPO funds will be used for expansion

PhysicsWallah recently filed updated draft papers with markets regulator Sebi to raise ₹3,820 crore, which will be used for expansion and growth initiatives.

 

The proposed IPO comprises a fresh issue of equity shares worth ₹3,100 crore and an offer for sale (OFS) of shares aggregating up to ₹720 crore by promoters. Both promoters, Alakh Pandey and Prateek Maheshwari (referred to as Prateek Boob in official filings), will each offload shares worth ₹360 crore through the OFS. At present, both hold 40.35 per cent stake each in the company.

 

The Noida-based PhysicsWallah filed draft papers in March with Sebi for an IPO through a confidential pre-filing route and received the market regulator's approval in July. Following this, the companies are required to file an updated DRHP before filing an RHP. The company opted for the confidential pre-filing route, which allowed it to withhold public disclosure of IPO details until later stages.

The big picture

The company’s IPO plans come at a turbulent time for India’s edtech sector. Over the past year, major players like Unacademy and Vedantu have scaled back operations and downsized their workforces amid slowing growth and intense competition. Byju’s, once the shining star of India’s edtech boom with a valuation of $22 billion, is now grappling with insolvency pressures from US lenders, raising concerns about debt and liquidity in the sector.