Edtech company Byju’s, which is struggling with liquidity problems, has delayed paying employee salaries for the month of January, the company’s management told its employees in an email.
Although the edtech company assured in December that salaries would be credited on the first day of each month, there was a delay in the disbursement.
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“There is a slight delay in salary expenses this month due to the artificially induced crisis of these selected investors,” the email read.
The postponement of salary expenditure occurred shortly after the request of investors for an extraordinary general meeting (EGM) to deal with resolutions regarding management, financial mismanagement, and compliance issues.
It further reassured its employees that the salaries will be paid in phases starting today (February 2) and ending by Monday (January 5). According to the email, founder and CEO Raveendran de Byju has pledged his sole home to ensure financial security of the company.
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Recently, the edtech company announced its intention to secure funding through a rights issue, targeting a post-money valuation of $225 million. Notably, this valuation represents a stunning 99 percent decline compared to the company’s previous funding round, in which it was valued at an impressive $22 billion.
Investors further advocated for a restructuring of the Board of Directors to ensure that it is no longer under the exclusive control of the founders of Byju’s parent company, Think & Learn. Additionally, there was a demand for a change in leadership.
Byju’s, once hailed as India’s most valuable startup, has faced a series of challenges since the start of 2022, including issues related to accounting irregularities, alleged mis-selling of courses and large layoffs.
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Over the past 12 months, the company has implemented significant workforce reductions, grappling with the dual challenges of declining venture capital funding and slowing demand for online learning services. Consequently, key members of its investment board left, citing disagreements with founder Raveendran.
In response to these challenges, Byju has taken steps to address some of the issues. Early investor Ranjan Pai injected additional capital, an advisory council consisting of industry veterans such as Mohandas Pai and Rajnish Kumar was established, and Arjun Mohan was promoted to the role of CEO. Additionally, the company is in discussions about the possible divestment of assets such as Great Learning and Epic.
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Published: 02 Feb 2024, 16:30 IST
(tagsTo Translate)Byju