New Delhi:

Byju’s is laying off about 500 employees, including from sales, amid a financial crunch, sources said, even as the troubled edtech firm maintained that it is in the final stages of business restructuring to streamline operations.

The layoff in the embattled edtech company began 15-20 days ago, sources said, adding that it would impact 500 employees.

They, however, pointed out that the edtech player might not have to resort to further rationalisation, except in the ‘worst case scenario’.

The latest round of job cuts will impact sales functions, teachers and some tuition centres.

There was no official word from Byju’s, which has been embroiled in a legal dispute with some of its investors, with regard to the layoffs.

Few staff members were purportedly communicated about the development over the phone.

When contacted, Byju’s spokesperson, in an email response, said, “We are in the final stages of a business restructuring exercise announced in October 2023 to simplify operating structures, reduce the cost base, and better cash flow management”.

“As you are also aware, we are going through an extraordinary situation in the company because of the ongoing litigation with four foreign investors, where every employee and the ecosystem is going through tremendous stress, given the present circumstances,” the spokesperson said.

Byju’s said that it regrets the “unfortunate situation” the company has been forced into.

“Still, it is something that we will put behind us soon with majority investor support for the USD 200 million rights issue. We request everyone’s understanding of the individual and collective stress on the system, which might be prompting some unforeseen situations for the departing employees,” Byju’s spokesperson said.

Byju’s had earlier indicated that the business rehaul exercise would impact nearly 4,500 people, and subsequently in October and November of 2023, as many as 2,500-3,000 people were laid off.

Considering that nearly 3,000-3,500 people have been affected by layoffs so far, it still leaves the possibility for further retrenchment of 1,000-1,500 people.

Byju’s recently informed its employees that there will be a delay in the disbursement of March salaries.

The management in a communication to employees had blamed the situation on an interim order obtained by “a few misguided foreign investors” in late February, which “restricted usage of the funds raised through the successful rights issue”.

Byju’s had also sought to assure staff that it is following a parallel line of credit to ensure that employees get their salaries by April 8.

A clutch of investors of Byju’s had filed an oppression and mismanagement suit against the company management before the National Company Law Tribunal (NCLT), seeking to oust the founders, including CEO Byju Raveendran, and appoint a new board.

Earlier, the National Company Law Tribunal (NCLT), Bengaluru Bench declined to grant a stay on the extraordinary general meeting (EGM) called by ‘Think and Learn’, owner of the Byju’s brand, on March 29. The EGM was called to hike the authorised share capital of the embattled edtech firm, following the recent USD 200 million rights issue.

The company had closed the USD 200 million rights issue in February at a 99 per cent lower valuation compared to its peak enterprise value of USD 22 billion.

The once-storied edtech startup, Byju’s rose to dizzying heights before facing a slew of challenges.

While the return of students to physical classes post-pandemic and the recent acquisition of Aakash put Byju’s under a financial strain, the edtech firm in the last one year suffered other setbacks too, including its auditor resigning, lenders beginning bankruptcy proceedings against a holding company and a US lawsuit disputing the terms and repayment of a loan.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

New Delhi:

Edtech firm Byju’s parent company, Think & Learn Pvt, has found itself embroiled in a complex web of financial mismanagement, offshore dealings, and legal disputes. At the centre of it is $533 million, a Florida hedge fund, a bankrupt shell company and Byju’s beleaguered founder, Byju Raveendran. 

Byju’s major stakeholders last month voted to remove Mr Raveendran from his role as chief executive officer and stripping him of his position on the board of the company he established back in 2015. Byju’s, once hailed as one of India’s most profitable start-ups with a valuation exceeding $20 billion, has witnessed a staggering decline of approximately 90 per cent in the past year.

The Florida Link

The story begins with a small Florida hedge fund, Camshaft Capital Fund, accused of assisting Think & Learn in concealing $533 million. This staggering amount, crucial to the ongoing financial tussle, was initially held by Byju’s Alpha Inc., a bankrupt shell company affiliated with Think & Learn. Lenders, owed $1.2 billion, took control of Byju’s Alpha after it defaulted on its loan. The $533 million, allegedly transferred to Camshaft Capital Fund, was subsequently moved to an undisclosed offshore trust by Raveendran’s brother, Riju Ravindran.

Last month, Alpha had filed for bankruptcy protection over the $1.2 billion loan default.

The lenders, seeking repayment of the $1.2 billion and the elusive $533 million, have been locked in a legal struggle with Byju’s. A court ruling in the US state of Delaware gave lenders control of Alpha, a decision now under appeal by Riju Ravindran. A US court on Friday dismissed Camshaft Capital Fund’s attempt to avoid disclosing details about the cash. 

Byju’s lawyer, Benjamin Finestone, revealed during the hearing that the $533 million was initially transferred to Camshaft Capital Fund before being moved to an unnamed offshore trust. 

Potential Sanctions

Camshaft Capital Fund has resisted disclosing information about the money, citing its “duty” to protect clients and redirecting inquiries to a Delaware company called Inspilearn, a Delaware company that allegedly received the money from Camshaft before its transfer to the unnamed trust.

However, a US judge labelled Camshaft’s reluctance as a “huge red flag.” Failure to comply with the court’s order could lead to sanctions, as the judge threatened a “show cause” hearing on Monday if the information is not provided.

Series Of Setbacks

Byju’s, once valued at $22 billion in 2022, has faced a tumultuous period since early 2023. Auditor resignations, lenders initiating bankruptcy proceedings, and a US lawsuit challenging loan terms have contributed to the company’s downfall.

Byju’s is also grappling with financial challenges that extend beyond courtrooms. Mr Raveendran informed employees recently that the company is unable to process salaries due to a legal dispute with investors, reported news agency Reuters. 

Byju’s started its venture in 2006 by offering classes for MBA aspirants preparing for the CAT exam. Over the years, the edtech firm diversified its offerings, extending its reach from postgraduate to undergraduate and eventually school students. In 2015, it launched Byju’s learning app, setting the stage for the company to become India’s first ed-tech unicorn in just four years.