A day after a group of Byju’s investors issued notice for convening an extraordinary general meeting (EGM) to oust the current leadership team led by founder-CEO, Byju Raveendran, the company said that its shareholder agreement does not give investors the right to vote on CEO or management change.
“Think & Learn (TLPL), the parent of Byju’s, has noted with sorrow, statements from a select few investors calling for an EGM to replace founder and group CEO Byju Raveendran. Under these unfortunate circumstances, we would emphasise that the shareholder’s agreement does not give them the right to vote on CEO or management change,” the company said in a statement on Friday.
Byju’s will continue with the proposed $200-million rights issue that was announced on January 29, for which it has received encouraging responses from multiple investors, the statement added.
In an email to employees on Friday, the company also blamed “an artificially induced crisis” by a select group of investors for a delay in paying the January salary. The salary will be paid in a phased manner starting Friday and will be completed by Monday, it said.
“The success of the rights issue will ensure that we have sufficient operational capital to fund our short-term needs from March onwards,” the email said.
“The company is gladdened by the support received by a wide section of its shareholders. The criticality of the rights issue has been shared with all shareholders, with capital being pivotal for a successful turnaround. Unfortunately, the company and our employees are paying the price for a stand-off triggered by some investors,” Byju’s said.
It said the company has not had any external investor funding for nearly two years apart from the founder infusing over $1 billion and this is a reason for it launching a rights issue as a quick and equitable way to raise money.
On Thursday, a group of investors including Peak XV Partners and Prosus, said they sent the notice seeking the EGM after earlier requests to Think and Learn board in July and December, 2023, were disregarded.
“The resolutions being put forward for the EGM to consider include a request for the resolution of governance, financial mismanagement and compliance issues; the reconstitution of the board of directors, so that it is no longer controlled by the founders of Think and Learn; and change in leadership of the company,” the investors said in a statement.
General Atlantic, Sofina, the Chan Zuckerberg Initiative, Owl Ventures and Sand Capital are among the signatories from the investor group. “We are deeply concerned about the future of stability of the company under its current leadership and with the constitution of the board,” the investors had said in their statement on Thursday.
At present, the company’s board consists of founder and CEO Byju Raveendran, his co-founder and wife Divya Gokulnath, and his brother Riju Ravindran. Other members had quit last year.
Former State Bank of India chairman, Rajnish kumar, and former Infosys CFO, TV Mohandas Pai are part of Buju’s advisory council, which was formed last year in July after the resignation of Prosus, Peak XV and Chan Zuckerberg Initiative representatives from the board. In a letter sent to the shareholders on January 29, Raveendran had informed them about the board’s decision to raise capital through the rights issue.
According to sources, Byju’s has reduced the monthly burn rate of its core business to Rs 50 crore and aims to achieve operational break-even in the next 2-3 months. Additionally, the company plans to reconstitute the board after completing the FY23 audit.
Last week, the company posted its FY22 financials reporting a consolidated revenue jump of 118% from Rs 2,428 crore in FY21 to Rs 5,298 crore in FY22. Its losses also shot up from Rs 4,564 crore in FY21 to Rs 8,245 crore in FY22.