Byju Raveendran, the founder and chief executive officer of the problematic educational technology company Byju’s, has taken a stand against a group of investors, claiming that their decision to prevent the company from making use of the cash acquired through the rights issue has made it more difficult to pay salaries to staff. Byju Raveendran’s statement was made in response to the investors’ decision to prevent the company from using the cash for the rights issue. I must inform you with regret that we will continue to be unable to process your wages. I apologize for the inconvenience this may cause you.
This past Saturday, Raveendran penned a letter to the workforce!
Which was subsequently reviewed by the Times of India. He said in the letter that “unfortunately, a select few” (four out of our more than 150 investors) have degraded themselves to a cruel level, which has meant that we are unable to use the cash raised to pay the income that you have worked so hard to accomplish. Because of this, we are unable to pay you the salary that you have worked so hard to achieve.
“At their request, the amount that was raised through the rights issue is currently locked in a separate account,” Raveendran told reporters. Even though the company was able to successfully close its rights issue and raise $200 million, he went on to explain that the company is currently going through a crisis even though it was able to do both of those things. Byju has mentioned that it is taking some measures to ensure that the salary will be paid by the 10th of March. This is something that has been declared by the company.
Several of the company’s investors, including Prosus, Peak XV Partners, General Atlantic, and Sofina, had submitted a request to the National Company Law Tribunal (NCLT) to get a hold on the rights issue. Specifically, they indicated that there are strong suspicions that the promoters of the company have been siphoning off monies and that the company is currently being probed by the Ministry of Corporate Affairs (MCA) and the Enforcement Directorate (ED). The court granted an interim order that instructed Byju to place the cash that was received as a result of the rights issue in a separate escrow account until further proceedings.
Even though the court had permitted Byju to move forward with the rights problem, this was carried out. Additionally, the court said that the funds should not be withdrawn until the conclusion of the litigation that was launched by the investors against the management of the firm; the complaint was filed for oppression and mismanagement. The lawsuit was filed against the corporation.
It is a grim reality that some of these investors have already earned significant returns; in fact, one of them has gained an incredible eight times their initial investment in Byju’s. This individual has made a significant amount of money. An acknowledgment of this fact is a truth that is unpleasant to accept. Despite this, Raveendran revealed to the staff that their actions exhibited a callous disregard for our lives and the ways by which we supported ourselves financially.
Because the company was having trouble meeting its existing commitments, it had been relying on the proceeds from its rights offering to meet its obligations. To increase the amount of capital that is authorized, Byju will now be necessary to conduct an extraordinary general meeting (EGM) to obtain consent from shareholders and increase overall capital authorization. There have been numerous hours spent examining every potential scenario, contacting our legal teams, and taking legal action to protect your rights. Your rights have been argued for.
However, despite our best efforts, we are left with no alternative but to confront the terrible fact that we are temporarily unable to provide you with the financial assistance that you deserve”, Raveendran remarked. “We are sorry for any inconvenience this may cause you.” “We would like to apologize for any inconvenience this may cause.”
The shareholders of Byju’s are currently engaged in a heated fight with the company. The majority of the shareholders voted to remove Raveendran from his role as CEO and to rearrange the board of directors that is run by the family.