Edtech giant Byju’s has finally begun paying salaries for the month of March after a two-month delay. The salary payout process, which was initiated on Monday, is expected to be completed by April 18. This comes as a relief to the employees of the company who had been waiting for their salaries.
In an email sent to its employees, as reported by the Economic Times, Byju’s informed them about the commencement of the salary disbursement process. The company mentioned that it has arranged for an alternative line of credit to ensure timely payments.
“We are pleased to inform you that salary disbursement has commenced today and will be completed over the next 10 days. However, we have arranged an alternative line of credit to ensure timely payments. We sincerely appreciate your patience and understanding throughout this period,” the email stated.
Despite this positive development, Byju’s is facing challenges with accessing the funds from its recently floated rights issue. Currently, the company is not permitted to utilize the proceeds from the rights issue, leading to delays in salary payments.
Byju’s is embroiled in a dispute with its investors, which include Prosus NV, Peak XV Partners, General Atlantic, and Sofina SA. These investors have filed a plea challenging the company’s decision to raise $200 million at a post-money valuation of $225 million.
In response to the plea filed by the investors, the National Company Law Tribunal (NCLT) has directed Byju’s to hold the funds from the rights issue in an escrow account until the matter is resolved. This has further contributed to the delay in staff salaries. Byju’s has also sought arbitration to address the dispute with its key investors.
The NCLT has given Byju’s a deadline of 10 days to file its response in the matter, with the case scheduled for the next hearing on April 23. Recently, an arbitrator instructed Byju’s not to sell the shares of a group firm after breaching terms of loans amounting to $42 million.
Byju’s, which was once valued at an impressive $22 billion, has witnessed a significant decline in its valuation due to various factors including regulatory investigations and investor allegations. The company, however, maintains its stance of denying any wrongdoing. Its current valuation stands around $250 million, marking a substantial drop of 99 percent from its peak valuation.
It has also come to light that Byju’s authorised share capital is ₹6.5 crore, whereas the face value of the rights issue is ₹40 crore. This discrepancy has prompted Byju’s to call for an Extraordinary General Meeting (EGM) to discuss increasing the authorised share capital of the company.
The challenges faced by Byju’s underscore the complexities and legal hurdles that can arise in the corporate landscape, particularly in disputes with investors and regulatory compliance. The company’s efforts to resolve these issues and ensure timely salary payments reflect its commitment to its employees amidst the ongoing challenges.
