Updated March 2nd, 2024 at 17:18 IST

BYJU's unable to pay salaries due to investors: Founder tells staff

Few investors have "stooped to heartless levels", ensuring we are unable to utilise the raised funds for salaries, Raveendran said.

Reported by: Business Desk
Byju Raveendran | Image:Instagram
Advertisement

Salary delay: BYJU'S is unable to pay salaries to its staff since the fund issue is locked in a separate account, founder Byju Raveendran has said amid its ongoing dispute with investors.

Few investors have "stooped to heartless levels", ensuring we are unable to utilise the raised funds to pay salaries, Raveendran has told the company staff in a letter.

Raveendran, in the letter, said the rights issue which was launched a month ago has been closed successfully.

Advertisement

"This was supposed to be a happy correspondence. After all, we now have funds to meet our short-term needs and clear our liabilities. However, I regret to inform you that we will still be unable to process your salaries," he was quoted as saying.

Raveendran said the company is still putting its best efforts to ensure that employees get the salaries by March 10.

Advertisement

"We shall make these payments the moment we are permitted to do so as per law," Raveendran added.

The previous month, BYJU'S faced challenges because of a dearth of investment, and “now we are experiencing a delay despite having funds,” Raveendran wrote.

Advertisement

"Unfortunately, a select few (4 out of our 150 plus investors) have stooped to a heartless level, ensuring that we are unable to utilise the funds raised to pay your hard-earned salaries," Raveendran said.

"At their behest, the amount raised through the rights issue is currently locked in a separate account," he added.

Advertisement

Raveendran blamed the select investors of being indifferent to the lives and livelihoods of others, even after benefitting from the substantial profits they made post their investment in the edtech poster boy.

"It is an agonising reality that some of these investors have already reaped substantial profits - in fact, one of them has made a staggering eight times their initial investment in BYJU'S. And yet, their actions convey a callous disregard for our lives and livelihoods," he said in the letter.

Advertisement

Raveendran said he left no stone unturned and has fought without any fear or tiredness, from engaging their legal teams and standing for their rights in order to honour the company's commitment to employees. 

“Countless hours have been spent exploring every possible avenue, engaging our legal teams, and advocating for your rights. However, despite our best efforts, we are left with no option but to confront the heart-wrenching reality that we are temporarily unable to provide you with the financial support you deserve,” Raveendran said in the letter.

Advertisement

The NCLT's Bengaluru Bench had mandated for the funds BYJU's received as part of the rights issue to be kept in a different escrow account, which it should not withdraw until the matter is disposed, according to a February 27 interim order.

The matter will next be heard on April 4.

Advertisement

The investors have accused BYJU's of siphoning $533 million in an obscure US hedge fund, seeking a stay on the $200 million rights issue on grounds of it being illegal and opposed to law.

This follows a dispute the company has with investors aiming to oust the company's founder from the board of the company. Raveendran, his wife Divya Gokulnath and brother Riju Raveendran were the only members from BYJU's on its board after the resignation of other members.

The National Company Law Tribunal on February 29 asked the embattled edtech to extend the closing date of its $200 million rights issue, which the company management expressed hesitation to accept.

Its investors, including Prosus, General Atlantic, Peak XV and Chan Zuckerberg had called for an Extraordinary General Meeting (EGM), and also approached the NCLT deeming Raveendran unfit to hold his position in the company. 

Over the rights issue, the estranged investors reported technicalities preventing the closure of the issue on Wednesday. BYJU's called for the rights issue at a 99 per cent cut from its once $20 billion valuation. 

The EGM conducted last month unfolded as a high-voltage corporate fiasco which saw shareholders of the company vote in one voice for the removal of BYJU's CEO Raveendran and his family from the company's board, accusing them of "mismanagement and failures." 

Once the poster boy of technology startups in India, BYJU's retaliated strongly to the EGM, as he called the voting invalid and ineffective since it was done in the absence of the company's founders.

As per sources close to the investors, over 60 per cent of the shareholders voted in favour of all the seven resolutions at the EGM, the resolutions of which consisted of removing BYJU'S current management, rejigging its board and conducting a third-party forensic investigation into the company's acquisitions. 

Advertisement

BYJU's saw troubled mount after a dream run triggered by the boost online education got amid the pandemic, when students were confined to homes. 

In the post-pandemic aftermath, students returned to physical classes. What caused further financial strain on the company included the recent acquisition of NEET preparation centre Aakash. Other issues surmounting the edtech firm in the past one year included the resignation of its auditor, debtors commencing bankruptcy proceedings against a holding company, as well as a US lawsuit against the $1.2 billion Term Loan B the company had raised in 2022.

BYJU's had also delayed salaries for the month of November, after which Raveendran was reported to have said of pledging his as well as family home to pay salaries to employees. 

Advertisement

(With PTI inputs)

Advertisement

Published March 2nd, 2024 at 16:22 IST