PhysicsWallah, a company that specialises in online and offline education, feels that social and professional chemistry with two of its crucial stakeholders, teachers and students, is important to earn profits. In its public issue prospectus, as a prelude to its forthcoming IPO (Initial Public Offering), the company fleshes out the reasons. Both the constituents are fickle in some ways, and ready to seek quick changes, if they are unhappy, or if they get better and more lucrative opportunities elsewhere. Retaining both students and qualified teachers becomes a paramount concern. If they leave, it leaves a bad taste. The company states, “The ‘PhysicsWallah’ brand is critical to our success. If we are not able to maintain our brand or reputation or are subject to negative publicity, there could be a material impact on our reputation and operations.”
Retaining faculty members, and attracting excellent teachers, are important to entice new students, and keep the old ones. But it is tough. Faculty may leave for several reasons such as better compensation from competitors, desire to start their own test preparatory centres (for competitive exams), offer home tuition that is less taxing and quite lucrative, or personal and family commitments. PhysicsWallah’s attrition is within industry norms; it fluctuated from over 40 per cent in FY-24 to 27 per cent in FY-25.
Remember, faculty constitutes the major expenses in the online-offline education model. In FY-25, expenses due to employees’ benefits, and professional fees comprised 56 per cent of the revenues from operations. The figure was higher at almost 69 per cent the previous year. Although, in most cases, faculty contracts include non-compete and exclusivity clauses, “there is no assurance that the faculty members will abide by the obligations…. These restrictions may not eliminate the risk of the faculty member joining our competitors, and we may lose our faculty members.” More importantly, those who leave PhysicsWallah can share “internal strategies and information about our business operations with competitors, which may significantly harm our business….”
This has happened before with PhysicsWallah. In March 2023, five of its faculty members, who taught JEE (engineering) and NEET education categories, launched a new offering with another education service provider. In January 2024, 11 faculty members switched to a competitor. Clearly, “any significant decrease in the number of faculty members, and our inability to find suitable replacements… in time may disrupt our ability to offer our courses on time. This in turn may affect student acceptances and student outcomes, adversely impacting our reputation and, consequently, our business, operations, financial conditions and cash flows….”
Students expect a lot from education courses. The quality of results impact enrollments. Without good results, they may drop out, or not complete them. PhysicsWallah admits that the number of student dropouts has gone up between 2023 and 2025, from 0.45 per cent to over one per cent, largely because the number of offline students has increased. The fees for the offline courses are higher and, hence, there is both a tendency to drop out faster, and seek refunds.
Negative media publicity is an area of concern. Such instances, which may relate to “teachers losing their temper or making insensitive remarks in class, as well as instances where students expressed dissatisfaction with our services.” Even allegations or charges within the industry can impact individual players. “For example, an incident in 2024 where education centres of another education company were flooded due to heavy rains in the NCR region of India resulting in fatalities, exposed us to negative publicity with respect to operations and infrastructure of our offline centres. As a result, the Government of Delhi issued specific regulations with respect to safety of educational institutions, including shuttering all educational institutions located in basements of buildings,” stated the prospectus.
In 2023, one of PhysicsWallah’s teachers lost his temper in class, and the video was shared on social media. While this, and other, incidents did not affect the business, it is crucial for those who offer educational courses to manage media publicity. “For example, according to the Redseer report, negative publicity stemming from mental health issues or suicides among students presents a big challenge for education players, subjecting them to more security and regulations,” explained the prospectus.
PhysicsWallah’s staff member, who pushed a student, was terminated after an internal assessment. In June 2024, a First Information Report (FIR) was filed, which alleged offences of “negligent conduct in relation to machinery, and endangerment of life and safety on part of our Company… against an employee… after a ceiling fan fell on a student” at an offline centre. The matter was settled. In another case, a student threatened a faculty member with a slipper. In 2024, an unidentified odor in a classroom forced students’ evacuation. A few were referred to the hospital.
