According to those acquainted with the situation, Byju Raveendran, the founder of the eponymous Indian ed-tech business Byju’s, has pledged his house and those held by his family members to gather money to pay staff during the company’s financial difficulties.
The persons, who wished to remain anonymous since the information is private, said that the former billionaire’s family’s two Bengaluru, southern India, properties and his unfinished mansion in the wealthy gated community of Epsilon, the city, were presented as security for a $12 million loan. The business utilized the money to pay the salary of 15,000 workers at Think & Learn Pvt., Byju’s parent company, said on Monday.
Founder Raveendran’s Desperate Measures Amid Financial Strains
In an effort to relieve the company’s financial strains and keep it viable, the founder has been going all out. The company, which was once the most valued software startup in India, is currently selling its kids’ digital reading platform, which is situated in the US, for around $400 million. In addition, it is embroiled in a lawsuit with creditors over the failure to make interest payments on a $1.2 billion term loan.
According to the correspondent, Raveendran, who was once valued at over $5 billion, pledged all of his parent business shares to finance around $400 million in personal debt. They argued that he was cash-strapped because he invested the $800 million he had generated via share sales back into the firm.
In the midst of a pandemic-era economic boom, Byju’s reported its first profits in years last month, showing that losses at Think & Learn somewhat decreased. Additionally, a government body in India completed its probe into the startup’s foreign funding. The business indicated in a statement last week that any fines would likely be minimal.
Byju’s Delayed Payments to Employees
Around 1000 employees’ salaries at Edtech firm Byju’s have been postponed because of an “unexpected technical glitch.” The struggling business announced that it was attempting to resolve the problem and would repay the outstanding amount by Monday, December 4. This event occurred just a few days after the business was charged with breaking the Foreign Exchange Management Act regulations in India. According to the Enforcement Directorate, Byju’s failed to allocate shares against the foreign investment of around ₹80 billion and postponed filing documentation against it.
The company in a statement to The Economics Time
“We have seen a sudden technical issue causing a delay in processing for certain workers. The payment will be handled by Monday when the issue is fixed.”
Earlier this week, the ailing ed-tech business argued that the ED notice was related to technical concerns, namely the delay in filing the Annual Performance Reports for foreign direct investment of ₹8,000 crore. Byju’s stated that it anticipated a little fine, if any, in relation to the issue.
Legal issues against BCCI
In addition, the financially strapped education institution is battling the BCCI in court. A Bloomberg story citing anonymous sources claims that the issue is related to a $20 million sponsorship royalty payment that was not made. The conflict between the Board of Control for Cricket in India and Think & Learn Pvt is scheduled to be heard on December 22, according to information disclosed by the National Company Law Tribunal.