Byju’s founder, Byju Raveendran reportedly called an urgent meeting today with senior management amid the delicate liquidity situation, as the edtech company struggles to pay salaries of its employees.

Raveendran also reportedly pledged his home, as well as those owned by his family members, to raise money for paying employees amid a cash crunch.

According to a finance media company, citing sources, two homes owned by Raveendran’s family in Bengaluru, and his under-construction villa in the city — were offered as collateral to borrow $12 million (₹100.05 cr) to pay salaries to employees.

“The startup used the funds to pay salaries to 15,000 employees in Byju's parent firm, Think & Learn Pvt Ltd,” the report added.

Lookback at the glory

Edtech company Byju’s was once a success story to behold. Valued at billion dollars, it was in true sense a ‘unicorn’ in the start-up world. The company also acquired sponsorship rights to sporting giants such as football federation FIFA and the Indian cricket team with BCCI.

The unicorn was flying so high that it also roped in footballer Lionel Messi as the brand ambassador, and at one point, actor Shah Rukh Khan was promoting it on national television.

The runway for the company only got wider and clearer when COVID-19 hit the world, as online learning became the only way to schooling.

The higher they rise…

As India reopened amid ‘hybrid normal’ and schools and colleges return to normal, edtech platforms saw a significant dip in the demand for online learning and some of such firms have either shut shops or fired employees in recent days.

Byju’s also faced the heat to keep up with the changing times. Reliable industry sources told the news agency that its global expansion plans had not yet reached the scale it had planned as of Mar 2023.

Most notable startup under Byju’s umbrella that faced trouble was online coding platform WhiteHat Jr, bought in July 2020 for $300 million. With WhiteHat Jr, Byju’s aimed to take coding to the world from India, hiring teachers on contractual-basis.

The fact is that the platform earned just ₹12.34 crore and ₹11.07 crore from its Australia and UK markets, respectively. WhiteHat Jr posted a massive ₹1,690 crore loss in the financial year 2021, while generating an operating revenue of ₹484 crore in the same period.

The platform’s losses skyrocketed in FY21 and its expenses reached ₹2,175 crore -- compared to ₹69.7 crore in FY20.

Layoffs

WhiteHat Jr laid off around 300 employees, after more than 1,000 of its employees resigned after being asked to return to office in April-May of 2023.

At around the same time, Byju’s founder and CEO Byju Raveendran told employees that there is a huge price to pay for walking on the path to profitability and the company will part ways with 5% or 2,500 employees to ‘avoid role duplication across our businesses’.

Troubles with ED

In May, the Enforcement Directorate (ED) has conducted search and seizure operation at three premises of Raveendran and his company ‘Think & Learn Private Limited’ in Bengaluru under the provisions of Foreign Exchange Management Act (FEMA), and claimed to have remitted ₹9,754 cr to various foreign jurisdictions.

In November, ED again issued a ‘show cause’ notice to Think and Learn Private Limited, and Byju Raveendran over alleged violation to the tune of ₹9,362.35 crore under FEMA.

BCCI and Byju’s row

In March, Byju’s and the BCCI (Board of Control for Cricket in India) had agreed on the extension of their partnership until the end of the 2023 ODI World Cup in India at a 10% increment in April.

However, the edtech company had apparently not submitted the required bank guarantee and owed the dues. The whole sponsorship issue was discussed by the BCCI Apex Council on Mar 23, 2023, a sports website reported.

“As of 16.7.2022, Bjyu’s following payments have been overdue -- ₹22,22,76,000 (Net of TDS) March 2022 as of (previous contract term). Invoice amounting to ₹106.49 crore from June-July 2022 (new term) are raised out of which ₹86.21 crores is due (as on 21 July 2022),” a BCCI note put up before the Apex Council read.

According to the latest reports, Byju’s needs at least ₹500-₹600 crore to pay off dues of employees and vendors, along with the income tax department and the BCCI, according to sources.

The BCCI has taken Think & Learn, the parent company of Byju’s, to the National Company Law Tribunal (NCLT).

The BCCI claimed that the edtech firm had defaulted payment of  ₹158 crore. The NCLT has granted a period of two weeks to Byju’s to file reply in the case and another week thereafter to BCCI to file rejoinder.

What’s next?

Embattling edtech unicorn Byju’s parent company Think and Learn Private Limited will hold its 11th annual general meeting on Dec 20, as it faces a myriad of issues amid severe cash crunch.

The meeting has been called to approve and adopt the audited financial statements of the company for their financial year ended on March 2022, together with the report of the board of directors and auditors.

The meeting will also consider and approve the appointment of MSKA & Associates as statutory auditors of the company.

(Source: IANS)

-Edited for style

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