Byju’s has told its employees in a letter that February salaries have been deferred as the funds raised through a rights issue are inaccessible due to a legal dispute with certain investors, including Prosus, GA, Sofina and Peak XV.
In a letter to staff on Saturday, founder & CEO Byju Raveendran said the rights issue, launched a month ago, has been successfully closed. “This was supposed to be a happy correspondence. After all, we now have funds to meet our short-term needs and clear our liabilities. However, I regret to inform you that we will still be unable to process your salaries,” he wrote.
The letter added that the company is still striving to ensure that salaries are paid by March 10. “We shall make these payments the moment we are permitted to do so as per law.”
Raveendran said last month, the company faced challenges due to a lack of capital, and “now we are experiencing a delay despite having funds”.
He wrote: “Unfortunately, a select few (four out of our 150-plus investors) have stooped to a heartless level, ensuring that we are unable to utilise the funds raised to pay your hard-earned salaries. At their behest, the amount raised through the rights issue is currently locked in a separate account.”
Raveendran accused these select investors of having a callous disregard for the lives and livelihoods of others even though they had reaped substantial profits from investment in Byju’s.
“It is an agonising reality that some of these investors have already reaped substantial profits — in fact, one of them has made a staggering eight times their initial investment in Byju’s,” he said in the letter.
Raveendran noted that he has fought fearlessly and tirelessly, “leaving no stone unturned” to find a way to honour the company’s commitment to employees. “Countless hours have been spent exploring every possible avenue, engaging our legal teams, and advocating for your rights. However, despite our best efforts, we are left with no option but to confront the heart-wrenching reality that we are temporarily unable to provide you with the financial support you deserve,” he said.
Sources said the company has an ongoing liability of around `80 crore with regard to employee salaries. Currently, the company has around 15,000 employees on its payroll, with close to 5,000 contractual hires.
“The idea was to use $90-100 million to clear our immediate liabilities that include payment to be made to BCCI, vendor dues, TDS, and full and final settlements of current and ex-employees, respectively. This is apart from the $1.2-billion term loan B settlement,” said a person aware of the matter. “The priority is to ensure that employees who have chosen to commit to the company are protected. However, the protracted actions of a few investors is hurting the company’s commitment made to its employees,” they added.
Meanwhile, a group of at least 20 former employees said it is preparing to take legal action against the company in light of full and final payments now being delayed for over 120 days with no clear commitment in sight. The company has also been urged by the Karnataka labour department to clear pending dues to former employees. The company also hasn’t deposited TDS of employees above the `30-lakh CTC bracket since April 2023.