Byju’s founder secures private debt to meet employee salaries amid financial strains, NLCT dispute, says report

While senior-level staff received partial payments, teachers and lower-ranking employees were paid in full for March, it added.

The firm had previously disbursed partial salaries for February and delayed payments for March, but now both February and March salaries have been partially settled, as per the report.

Byju’s, with about 15,000 employees, has a total salary expenditure ranging between ₹40 and 50 crore, sources told the paper.

Delay Tied to Locked Funds Amid Investor Dispute

The delay in salary payments is linked to funds raised through a recent rights issue, which have been locked in a separate account due to an ongoing dispute with investors.

“The salaries got credited on Saturday. Byju Raveendran raised more personal debt to pay salaries this month. 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,” one source said.

Byju’s management, including Raveendran, assured employees that regardless of the court verdict, they will receive their March salary through a parallel line of credit.

NCLT Dispute – The Details

Byju’s and its investors are embroiled in a dispute at the NCLT over the company’s rights issue of $200 million, with investors alleging oppression and mismanagement. The four investors — Prosus, General Atlantic, Sofina, and Peak XV (formerly Sequoia) — sought a stay on the rights issue, fearing it would diminish the value of their investment.

The NCLT, in its order on 27 February, instructed Byju’s to place funds obtained from the rights issue in an escrow account until the resolution of the matter. Byju’s expressed confidence in the Indian judicial system and awaits a favourable outcome to utilise the funds raised through the rights issue and address current financial challenges.

In a recent letter to shareholders, Raveendran disclosed that the company had secured over 50 percent of the vote to increase authorised share capital, facilitating the $200 million rights issue. Byju’s has faced previous delays in salary payments, partly due to the ongoing investor dispute.

In March, the company processed partial salaries for February, with plans to clear the remainder upon receiving funds from the rights issue.

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Published: 23 Apr 2024, 11:53 AM IST