Edtech Giant Struggles with Cash Crunch as Legal Battles Hinder Fund Utilization
Byju’s, one of India’s leading edtech companies, has once again deferred salary payments for its employees for the second consecutive month, attributing the delay to legal restrictions imposed on the utilization of funds raised through a recent rights issue. The company, embattled by legal challenges from “misguided foreign investors,” expressed regret over the delay while expressing confidence in the Indian judicial system to resolve the matter.
In an internal communication accessed by IANS, Byju’s management conveyed the unfortunate news to its workforce, signaling ongoing financial challenges due to the regulatory hurdles faced by the company. Despite the setback, Byju’s remains optimistic about a favorable outcome from the ongoing legal proceedings, which would enable it to address the financial constraints and fulfill its salary obligations.
Amidst the cash crunch, Byju’s has implemented a remote work policy for its employees, relinquishing office spaces across the country, except for staff stationed at offline tuition centers. The decision reflects the company’s efforts to streamline operations and minimize overhead costs amidst the prevailing financial strain.
Byju’s recent extraordinary general meeting (EGM), convened to discuss capital raising through a rights issue, faced opposition from certain investors who have resorted to legal action, complicating the company’s fundraising efforts. Despite these challenges, Byju’s assured its employees of exploring alternative avenues, including a parallel line of credit, to ensure timely salary disbursements by April 8.
In a bid to reassure its workforce, Byju’s co-founder and CEO, Byju Raveendran, appealed to disgruntled investors for collaboration, emphasizing the shared goal of overcoming the current impasse. Expressing empathy towards employees affected by the salary delay, the company underscored its commitment to addressing the situation promptly once the legal constraints are resolved.
As Byju’s navigates through the regulatory and financial hurdles, stakeholders remain hopeful for a swift resolution that would alleviate the uncertainty surrounding salary payments and restore stability to the company’s operations.
