Resonance’s Debt Trap, PhysicsWallah Enters Yoga Space, and PB Fintech Cancels QIP

Resonance was once a defining name in India’s offline test-preparation industry. Its classrooms in Kota symbolised scale, discipline, and results. Today, it symbolises something far more uncomfortable: how leverage can quietly hollow out a business long before the market notices.

At the heart of the crisis sits a paradox that should unsettle every Indian founder who has ever taken on leverage. BASE, the South-India subsidiary, was profitable in FY24, generating ₹67.5 crore in revenue and ₹11.5 crore in profit. Internal communication reportedly confirmed it had enough cash to cover a year of expenses. Yet salaries could not be paid. Expense accounts were frozen. Operations stalled. Cash existed, but access to it didn’t. This is what a debt overhang looks like when creditors, not markets, take control of the business.

The numbers explain why lenders acted. Resonance’s group-level revenue in FY24 was about ₹160 crore, against an estimated ₹800 crore of accumulated debt raised over a decade from banks, NBFCs, and private credit players. Even generous assumptions on margins cannot make that math work. Interest alone would consume most of the operating cash flow. No amount of cost-cutting or enrolment recovery can bridge that gap. Once debt crosses a certain threshold, equity incentives collapse, fresh capital disappears, and every decision becomes defensive.

The deeper mistake was not borrowing - it was what the borrowing funded. A significant portion of this capital was reportedly deployed into real estate: campuses, hostels, and non-core assets. For a teacher-centric, reputation-driven business, this is a fatal mismatch. Real estate is illiquid, slow-yielding, and immobile. When demand weakens - as it did post-Covid - those assets trap capital instead of protecting it. What was framed as “infrastructure expansion” quietly turned a coaching company into a leveraged property bet.

Covid only accelerated the reckoning. Kota enrolments fell sharply. Across test-prep segments, offline admissions declined 40-50% in the 2025-26 cycle. Most Resonance offline centres shut during and after the pandemic. Today, Kota is reportedly the only operational centre, with around 1,000 enrolments. At its peak eight to ten years ago, the company enrolled more than 80,000 students annually. That is not a cyclical dip. It is a complete erosion of scal

Regulatory pressure followed: dummy-school crackdowns, coaching-centre regulation bills, age restrictions, and rising scrutiny over mental-health practices. The old model - high-pressure, campus-centric, long-duration offline coaching - lost both volume and legitimacy at the same time. Meanwhile, hybrid and digital-first players scaled with lower fixed costs and greater flexibility, even if profitability remained elusive.

What makes the Resonance-BASE case especially damaging is the collateral impact. BASE became hostage to group-level enforcement despite being operationally viable. Blanket account freezes may strengthen creditor leverage in the short term, but they destroy the very human capital - faculty trust, student continuity, brand goodwill - that underpins recovery. Courts have increasingly questioned such disproportionate freezes in other contexts, but by the time relief arrives, damage is often irreversible.

Let’s go through what else is happening in Indian startup world - Grab your simmering cup of StartupChai.in and unwind with our hand-brewed memes.

“Humare Saath Haath Mila Lo”: Gig Worker Unions Meet Rahul Gandhi To Flag Need For Legislation

Gig worker unions met Rahul Gandhi to flag weak implementation of platform worker welfare policies and press for dedicated legislation.

Delegations from five states backed the demand, with unions calling for a nationwide “Breakdown” protest on February 7 to escalate pressure on the government.

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“Ye Kis Field Mein Aagye”: PhysicsWallah enters yoga and wellness, raises stake in Kamya Yoga & Wellness

Edtech major PhysicsWallah has entered the yoga and wellness space by increasing its stake in Kamya Yoga & Wellness through a second tranche investment.

The ₹1.5 Cr deal involves subscribing to Series Seed CCPS, taking PW’s shareholding in the company to 41.18% on a fully diluted basis.

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“Kayde Mein Raho, Faayde Mein Rahoge”: PB Fintech Cancels QIP Plan After Shareholder Backlash

PB Fintech has dropped its recently announced plan to raise funds through a QIP after facing strong shareholder backlash and a sharp sell-off in its stock.

The proposed fundraise, aimed at funding potential inorganic acquisitions, was discussed in a board meeting yesterday before the management decided to pull the plug.

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“Suswagatam Suswagatam”: Myntra Appoints Former Google Engineering Head Pramod Adiddam As CTO

Myntra has appointed Pramod Adiddam as its new CTO, tasking him with driving the company’s technology strategy and long-term innovation roadmap.

Adiddam previously served as VP and head of engineering at Instacart, and the move follows Myntra’s recent appointment of Ritesh Mishra as senior VP and head of category and revenue.

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“Behti Ganga Mein Haath Dhona”: India’s Neocloud Players Ride The Sovereign AI Wave

India’s neocloud players are riding the sovereign AI wave as demand surges for GPU-as-a-Service infrastructure driven by local data residency and cost-efficient scaling needs.

Providers like Yotta Data Services, NxtGen, NeevCloud, and E2E Networks are seeing rising traction as enterprises and governments prioritise sovereign AI capabilities over hyperscaler dependence.

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1. IPO-bound Aye Finance has raised ₹455 Cr from anchor investors after allotting 3.52 Cr shares at ₹129 apiece, the upper end of its price band, with domestic mutual funds picking up 21.8% of the anchor book. The NBFC’s public issue includes a ₹710 Cr fresh issue along with an OFS of up to ₹300 Cr.

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2. Fractal Analytics has raised ₹1,248 Cr from anchor investors after allotting 1.39 Cr shares at ₹900 apiece, the top end of its IPO price band. Domestic mutual funds took 38% of the anchor book, alongside global investors such as Morgan Stanley, Kuwait Investment Authority, and others.

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3. Gurugram-based fabric maker Jain Cord has raised ₹200 Cr in its first institutional Series A round from the Lohia Family Office, operated under Indorama Capital Holdings Pte. Ltd.. The company issued CCPS and equity shares at ₹629 apiece as per its regulatory filing to fund expansion.

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