The fortunes of Byju’s, a prominent Edtech company, have drastically changed since the previous year. Although the company’s CEO, Byju Raveendran, is still upbeat about the company’s prospects, the success story of India’s most valued start-up appears to have taken a negative turn.
Raveendran promised staff members during a virtual town hall on Thursday that Byju’s “best is yet to come,” but he only obliquely mentioned the difficulties that have afflicted one of the most valuable start-ups in India. To learn everything there is to know about what happened to Byjus, scroll down.
What Happened To Byjus?
Over the past year, the edtech company has faced numerous difficulties, beginning with several waves of layoffs that resulted in the termination of thousands of employees.
Over the past few months, the Enforcement Directorate’s (ED) investigations, several high-profile board withdrawals, multiple value decreases, delayed financial statements, and even an ongoing court struggle over a $1.2 billion term loan have all contributed to the company’s problems.
Layoffs And Terminations
The company first revealed its intentions to lay off 2,500 workers in 2022. The CEO of the edtech company expressed his sincere apologies to the fired staff members, noting that the organization had to make the tough choice due to the challenging macroeconomic environment. However, the layoffs didn’t end there. Earlier this year, the edtech major began a new round of layoffs that will see 1,000 more staff across divisions let go. To further reduce expenses, this was done.
Although layoffs were widespread in the technology industry last year, new reports suggest that Byju’s is considering reducing staff numbers to reduce expenses. Additionally, it has come to light that the company has requested voluntary resignations from its staff without informing them first.
According to a recent study, hundreds of workers learned that June 16 was their last day of employment. Their identity cards were seized, and their email addresses were terminated. An impacted worker recently related his experience on LinkedIn, claiming that despite being available around the clock, he was asked to quit.
Additionally, Byjus has been charged with failing to pay its workers’ provident fund from October 2022. Raghunathan KE, an EPFO board member, had to make a statement to defuse the tension. He declared that all of Byju’s workers would get their overdue provident fund (PF) dues, as promised by the Employees Provident Fund Organization (EPFO).
According to Business Today, Byjus has even postponed offer letters to prospective hires for six months. A few workers who were scheduled to start work for the company said that their employment offer letters had been delayed by as much as six months. Currently, some workers are being told that their start date has been further pushed back until January 2024. The CEO has also pledged family homes to raise funds for the salaries of 15,000 employees:
Byju Raveendran Pledges family homes to raise funds for salaries of 15,000 employees- Report#ByjuRaveendran #Byjushttps://t.co/ZPcU2R3dtU
— Zee News English (@ZeeNewsEnglish) December 5, 2023
Affected By Investigation
The ED is putting pressure on Byjus after performing searches and seizures at three of its locations in Bengaluru, Karnataka. The Foreign Exchange Management Act (FEMA) was the reason behind a lawsuit brought against Byju Raveendaran and his corporation, “Think & Learn Private Limited,” which is Byju’s parent company.
Breaking: ED raids Raveendaran Byju’s office, residence, investigation on for FEMA violations#byjus #UPSC#EnforcementDirectorate pic.twitter.com/fA0fPOfkqd
— Sourav |The UPSC Show (@theupscshow) April 29, 2023
According to the agency, during the searches, a number of digital files and documents that could be used as evidence were seized. ED officials stated that the company “has received FDI investment to the tune of Rs 28,000 crore during the period from 2011 to 2023” as a result of the searches.
Following ED’s operation, a representative for Byju’s legal team responded by referring to it as a “routine inquiry under FEMA” in a statement.
“We have been completely transparent with the authorities and have provided them with all the information they have requested. We have nothing but the utmost confidence in the integrity of our operations, and we are committed to upholding the highest standards of compliance and ethics,” said the spokesperson.
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The spokesman went on to say that Byjus will keep up its tight collaboration with the authorities to make sure they have all the data they want. Byju Raveendran actually assured staff members via email that the company had complied with FEMA requirements.
Court Dispute Over A $1.2 Billion Loan
Byjus is also involved in a lawsuit against lenders. Everything began when the edtech company failed to pay about $40 million, or Rs 330 crore, quarterly interest due on a loan that was taken out in November 2021.
On June 5, the interest payment on Term Loan B, or TLB, was due. However, Byjus chose not to pay its lenders and filed a lawsuit in its place. It is engaged in a legal dispute with Redwood, an American investment management company, at this time.
It should be mentioned that a TLB is a specific kind of loan that is given to finance major corporate transactions by institutional investors like mutual funds, hedge funds, or private equity firms. These loans typically have longer maturities—five to seven years—and fixed interest rates.
Redwood is allegedly pressuring Byjus to pay back the $1.2 billion loan faster, which is one of the main causes of the edtech company’s financial difficulties.
Due to the ongoing legal struggle over the loan’s fate in Delaware and New York courts, Byjus will not be making the payment until the issue is settled. Stay tuned to Digi Hind News for more information of this nature.
