What is next for BYJU’s as investors tighten pressure on Raveendrans to leave?

Future of edtech: BYJU’s investors, who hold between 47 to 60 per cent in the embattled edtech’s board, have voted to oust founder Byju Raveendran and his family from the company.

Raveendran, his wife Divya Gokulnath and brother Riju Raveendran hold 26 per cent in the company’s board.

The investors include Prosus, General Atlantic, Peak XV Partners and Chan Zuckerberg Initiative. 

The Extraordinary General Meeting (EGM) which concluded on February 23 amid chaos and attempted disruption, saw the investors vote unanimously on seven agenda items, including appointment of a new CEO.

Prosus, which holds a 9.6 per cent stake in BYJU’S, said the shareholders passed resolutions unanimously at the meeting on Friday. Gunjan Shukla, Prosus CFO of global edtech chaired the meeting, as per two sources cited by Reuters.

BYJU’S maintained that the EGM was invalid, since the board members – the three members of the Raveendran family – opted to sit out of the meeting.

The Enforcement Directorate has issued a second lookout notice against Raveendran, who is likely in Dubai, over alleged violation of the Foreign Exchange Management Act (FEMA) involving Rs 9,362.35 crore. 

Court intervention

BYJU’s had approached the Karnataka High Court for halting the EGM called yesterday. The High Court did not oblige BYJU’s request for the same, but said the investor consensus post the EGM cannot be implemented until the March 13 hearing.

The investors simultaneously approached the National Company Law Tribunal (NCLT), filing a mismanagement suit and  to remove Raveendran from the post of CEO and board of directors on grounds of him being unfit, PTI reported.

It also sought for the $200 million rights issue to be deemed void, and a forensic audit of the company on grounds of asset misappropriation by the Raveendran family.

What this means for the company

Raveendran has appointed Arjun Mohan as CEO of India operations, and advisors Mohandas Pai and Rajneesh Kumar to the BYJU’s board.

Amid salary delays, Raveendran said he has mortgaged his property for company expenses.

The March 13 hearing will decide if investors will have their way of Raveendran moving away from the company, as was voted by them. The direction courts take will also decide the future of the rights issue, which BYJU’S issued at a 99 per cent value cut. 

Amid employee salary issues, and no reimbursements to customers, like the case of disgruntled parents taking a TV home on no reimbursement of BYJU’s tablets, the investor-company conflict is only likely to make matters worse.

The founder, who is on the ED lookout, may still contest the investor stance. Investors not participating in the rights issue, the company said, are likely to lose their equity stake in the company. 

The public dispute and debacle not only affects customer and employee trust, which means more and more people will move away from being associated with BYJU’s, but also result in an impact on the edtech sector.