 "Raveendran secures pvt debt to pay March salaries of employees at Byju's")
Byju Raveendran, the founder and chief executive of Byju’s, has reportedly secured a private debt of about Rs 30 crore to pay March salaries of employees amid financial strains at the edtech company. While senior-level staff received partial payments, teachers and lower-ranking employees were paid in full for March. Earlier, the firm had paid part salaries for February and had delayed payments for March as well. Now, both February and March salaries have been partially settled.
The delay stems from funds raised through a recent rights issue, which have been locked in a ‘separate account’ due to the ongoing dispute with the investors. Byju’s has about 15,000 employees, and the total salary burn for the company ranges between Rs 40 and 50 crore, according to sources.
“The salaries got credited on Saturday. Byju Raveendran raised more personal debt to pay salaries this month,” said a person familiar with the development. “The rights issue money is still blocked by the foreign investors. Tomorrow is the National Company Law Tribunal (NCLT) hearing, and the firm may request the tribunal to release the funds.”
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The company management, including Byju Raveendran, had assured the employees that regardless of the court verdict, they are following a parallel line of credit to ensure employees receive their March salary.
Byju’s and its investors are fighting at the National Company Law Tribunal (NCLT) over the company’s rights issue of $200 million in a petition alleging oppression and mismanagement. The four investors — Prosus, General Atlantic, Sofina, and Peak XV (formerly Sequoia) — had sought a stay on the rights issue at less than 99 per cent enterprise valuation compared to Byju’s peak valuation of $22 billion.
Investors fear the rights issue would wipe out the value of their investment. Last month, NCLT Bengaluru, refused to stay the extraordinary general meeting (EGM). Byju’s held its EGM to increase authorised share capital.
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The NCLT, in its order on 27 February, 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 However, these funds cannot be withdrawn until the resolution of the matter related to the rights issue, according to sources.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.
Byju’s said it has faith in the Indian judicial system and eagerly awaits a favourable outcome that will enable it to utilise the funds raised through the rights issue and alleviate the financial challenges that it is currently facing.
In a letter sent recently, Raveendran informed shareholders that the company had secured more than 50 per cent of the vote through postal ballot — first announced on 7 March — to increase authorised share capital to account for the $200 million rights issue.
Byju’s has encountered salary payment delays previously, attributed in part to the ongoing dispute with investors. In March, Byju’s processed some portion of salaries for February to employees, utilising available capital outside the rights issue. “We processed part salaries for everyone for February, with plans to clear the remainder upon receipt of funds from the rights issue, expected shortly,” Byju’s management stated in a letter.