BYJU's breaks salary delay; pays up after 2 months’ hold

Edtech company Byju's has finally begun disbursing salaries after a two-month delay after it was restricted from using funds raised via a recent rights issue. In an email to employees on Monday, Byju's stated, "We are happy to announce that salary payments have started today and will be completed within the next 10 days."

Despite its efforts, the company has not yet received approval to access the funds from the rights issue, attributing the delay to actions taken by four of its investors.

This situation arose following a directive from the National Company Law Tribunal (NCLT), instructing Byju's to hold the funds from the rights issue in an escrow account until the resolution of an oppression and mismanagement plea filed by the same four investors. These investors, including Prosus NV, Peak XV Partners, General Atlantic, and Sofina SA, expressed dissatisfaction with Byju's decision to raise $200 million at a post-money valuation of $225 million, a massive drop of 99% compared to the previous funding round's $22 billion valuation.

Byju's mentioned that they had secured an alternative line of credit to ensure timely salary payments and expressed deep appreciation for their employees' patience and understanding during that period.

This development comes after Byju's had to defer staff salaries for the second consecutive month, awaiting approval from the NCLT to utilise funds from the rights issue.

The financial strain faced by Byju's has led to challenges in meeting salary commitments and maintaining regular operations, impacting various stakeholders such as the board, auditors, investors, employees, and government bodies.

It has recently been reported that Byju Raveendran, the founder of the ed-tech giant BYJU's, has seen a dramatic decline in his net worth, dropping from $2.1 billion a year ago to zero, according to the latest Bloomberg Billionaire Index 2024.

A prominent figure in the Indian startup scene, Byju Raveendran's BYJU's platform soared to prominence, reaching a valuation of $22 billion in 2022. However, the company has since faced controversies related to foreign funding, financial difficulties, layoffs, and legal disputes with foreign investors.

Launched in 2011, BYJU's transformed India's ed-tech landscape by offering a comprehensive range of online education services, catering to students from primary school to MBA levels. The platform gained significant traction during the pandemic in 2019-20 when people were confined to their homes. However, recent financial disclosures and controversies severely tarnished its reputation.

Furthermore, BYJU's engaged in an extensive spree of acquisitions in recent years, fueled by substantial investor funding exceeding $2 billion since the onset of the pandemic. However, when this funding stream ceased, coinciding with a funding drought in 2023, the company resorted to layoffs, letting go of more than 10,000 employees in just the past two years.