He said the firm has funds to meet the short-term needs and clear the liabilities, but it is unable to process the salaries
Byju Raveendran, the Founder and Chief Executive Officer (CEO) of Byju’s, said the edtech firm was unable to pay salaries to employees as the funds raised through a recent rights issue have been locked in a “separate account” due to the ongoing dispute with the investors.
Byju’s has about 15,000 employees. Raveendran said the rights issue, which was launched a month ago, has been successfully closed. He said the firm has funds to meet the short-term needs and clear the liabilities, but it is unable to process the salaries.
“I regret to inform you that we will still be unable to process your salaries. Last month, we faced challenges due to a lack of capital, and now we are experiencing a delay despite having funds,” said Raveendran, in a letter dated March 2 and a copy of which Business Standard has seen. “Unfortunately, a select few (4 out of our 150 investors) have stooped to a heartless level, ensuring that we are unable to utilise the funds raised to pay your hard-earned salaries. At their behest, the amount raised through the rights issue is currently locked in a separate account. 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,” said Raveendran.
As reported by Business Standard, Byju’s was expected to encounter another cash crunch, potentially impacting the daily operations of the educational technology (edtech) firm, including salary payments to its 15,000 employees. The National Company Law Tribunal (NCLT), in its order on February 27, has instructed the edtech firm to place funds obtained from the rights issue in an escrow account. However, these funds cannot be withdrawn until the resolution of the matter related to the rights issue, according to sources. This action is part of the oppression and mismanagement petition filed against Byju’s by four of the company’s investors.
In the letter, Raveendran said that he fought fearlessly and tirelessly, leaving no stone unturned, to find a way to honour the commitment to the employees. He said that countless hours have been spent exploring every possible avenue, engaging legal teams, and advocating for their rights. However, despite the best efforts, he said the firm is left with no option but to confront the heart-wrenching reality that the company is temporarily unable to provide them with the financial support they deserve. Raveendran said the firm is striving to ensure that the salaries are paid by the 10th of March. He said that the company shall make these payments the moment it is permitted to do so as per law.
“Words cannot express the deep sorrow and frustration that I feel on behalf of all of you. Rest assured, I will continue to fight for your rights and tirelessly seek a resolution to this,” said Raveendran. “Please hold on to hope, as we are actively pursuing every available means to rectify this situation at the earliest and restore stability to our lives. I am eternally grateful for your resilience and understanding during this incredibly challenging time.”
At the NCLT on February 27, Byju’s and its investors locked horns over the company’s $200 million rights issue in a petition alleging oppression and mismanagement. The company law court directed the embattled edtech firm to respond in writing to the investors’ plea within three days and reserved its order. The tribunal also issued notices to the Ministry of Corporate Affairs and the Registrar of Companies.
The petition has been signed by four investors – Prosus, General Atlantic, Sofina, and Peak XV (formerly Sequoia) along with support from other shareholders including Tiger Global and Owl Ventures, according to the sources.
Byju’s is grappling with multiple challenges, including a cash crunch, delays in financial reporting, and legal disputes with lenders. The company has raised a total of $5.08 billion from investors.
First Published: Mar 02 2024 | 7:57 PM IST
