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According to a report by Business Standard, Byju Raveendran, the founder and CEO of Byju's, has reportedly secured a private debt of around ₹30 crore to cover the March salaries of employees. This move comes amid financial challenges encountered by the popular edtech company.
The edtech unicorn has now distributed partial salaries for both February and March to employees, following previous delays.
The report further mentions that while senior-level staff received partial payments, teachers and lower-ranking employees were fully compensated for their March salaries.
The article also notes that the company had previously disbursed partial salaries for February and experienced delays in payments for March. However, it has now partially settled both the February and March salaries, as per the report.
According to sources cited in the article, Byju's, which employs around 15,000 individuals, has a total salary expenditure ranging between ₹40 and 50 crore.
The delay in salary payments is reportedly linked to funds raised through a recent rights issue, which have been locked in a separate account. This situation arises from an ongoing dispute with investors, according to the report.
Earlier on April 8, Byju's commenced the payment of March salaries after a two-month delay. In an email addressed to its employees, the edtech company disclosed that it had arranged an alternative line of credit to ensure timely salary disbursement.
According to sources familiar with the matter, the salaries were credited on Saturday, with Byju Raveendran reportedly securing additional personal debt to facilitate the payment. However, funds from the recent rights issue remain inaccessible due to a dispute with foreign investors. It was also noted that a National Company Law Tribunal (NCLT) hearing was scheduled for the following day, during which the company might seek approval for the release of these funds.
The email sent to employees reiterated that Byju's had yet to obtain any approval to access the rights issue funds, emphasizing that the company is legally prohibited from utilizing the proceeds of the recently floated rights issue.
Byju's management, including founder Byju Raveendran, reassured employees that irrespective of the court verdict, they would receive their March salaries through an alternative line of credit. This commitment underscores the company's dedication to ensuring the financial well-being of its employees amid the ongoing legal proceedings and funding challenges.
Investors in Byju's, including Prosus NV, Peak XV Partners, General Atlantic, and Sofina SA, have filed a plea challenging the company's decision to raise $200 million at a post-money valuation of $225 million.
In response to this plea, the National Company Law Tribunal (NCLT) has ordered Byju's to retain the funds from the rights issue in an escrow account until the matter is resolved. This development has led to delays in staff salaries as the company navigates the legal proceedings.
Additionally, Byju's has sought arbitration to address its dispute with its key investors. The NCLT has given Byju's a deadline of 10 days to file its response in the case, with the next hearing scheduled for April 23.
In a separate development on April 5, an arbitrator directed Byju's to refrain from selling the shares of a group firm after the company breached the terms of loans worth $42 million. These legal challenges and disputes with investors add further complexity to Byju's financial situation and operational stability.
On April 18, the NCLT Bengaluru bench granted Byju's a week to negotiate a settlement with Teleperformance Business Services, aiming to avert new insolvency proceedings against the struggling edtech firm. Teleperformance Business Services, an operational creditor, had initiated insolvency proceedings against Byju's after the company failed to make a ₹5 crore payment.
Meanwhile, Byju Raveendran received extended relief from the Karnataka High Court, permitting him to continue leading Byju's amid ongoing disputes between the edtech company and its investors. A group of key investors, including Prosus NV, Peak XV Partners, General Atlantic, and Sofina SA, had sought to remove Raveendran as the CEO, alleging mismanagement. Byju's, however, argued that the meeting was invalid without the presence of at least one founding member.
These legal battles and internal conflicts add further challenges to Byju's, which continues to grapple with financial difficulties and operational issues.
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Source: livemint
