Byju’s processes part of pending salaries, aims to pay balance soon
Byju’s has processed some portion of the salaries for employees as the funds raised through a recent rights issue have been locked in a “separate account” due to the ongoing dispute with investors. Byju Raveendran, the founder and chief executive officer (CEO) of Byju’s, said the edtech firm is striving to ensure that the salaries are paid by March 10. The firm has about 15,000 employees.
“We processed part salaries for everyone for February late last night (Friday) to the extent of capital we could get outside the rights issue. The company will pay the balance once the rights issue funds are available, which we expect shortly,” said Byju’s management in a letter, a copy of which Business Standard has seen. “However, due to today being a second Saturday and on account of the long weekend, we expect the salaries to be reflected in your accounts on Monday. We sincerely apologise for any inconvenience caused by this delay and are grateful for your understanding.”
Byju’s has appealed to the National Company Law Tribunal (NCLT) to allow it to use the funds, according to company sources. However, they said that full payment has been made to 25 per cent of employees at the base salary bracket. “However, due to yesterday being a second Saturday and on account of the long weekend, the firm expects the salaries to be reflected in their accounts on Monday,” said a person.
At the National Company Law Tribunal (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. NCLT, in its order on February 27, 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 However, these funds cannot be withdrawn until the resolution of the matter related to the rights issue, according to sources.
“As you know, a group of investors has blocked the funds raised through the rights issue, rendering them temporarily unavailable for our business purposes,” said Byju’s letter. “This situation has created an immediate financial constraint for the company. However, we assure you that we are actively working to resolve this matter and restore normalcy.”
In the interim, the company said it has made alternate funding arrangements to ensure the daily lives of employees are not disrupted. “Our commitment to serving our students with the passion and dedication they deserve remains as strong as ever, and we are taking all necessary measures to continue our operations smoothly,” said the firm. “We greatly appreciate your patience and cooperation during this challenging period. We will update you on further developments and progress in resolving the current situation.”
The petition against Byju’s at NCLT 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.
Four investors of Byju’s have also filed caveats in the Supreme Court, asking to be heard before any decision on a plea that is likely to be filed against an NCLT order.
First Published: Mar 10 2024 | 4:43 PM IST