Byju's says it has paid part salaries for February, will pay rest from rights issue fund

Troubled edtech giant Byju’s has managed to partially clear the February salaries for its employees amidst ongoing financial difficulties.

According to a Moneycontrol report, the edtech giant communicated to its staff that salaries were disbursed in full on Friday evening for employees up to a certain salary bracket, while the remaining employees received only a portion of their salaries. 

This comes after Byju’s continues to face cash flow challenges, compounded by disputes with investors over the use of proceeds from a recent rights issue.

Rights issue funds and investor dispute 

The company has been embroiled in a legal tangle with investors, including Prosus, who have sought to block Byju’s fundraising efforts. The dispute led to the funds raised through a $200 million rights issue being placed in an escrow account, temporarily restricting their use for business operations.

Byju’s has expressed optimism about accessing these funds shortly, which would enable them to pay the remaining balances of the February salaries.

Byju's explanation to employees 

Byju’s has issued multiple communications to its employees, explaining the situation and apologizing for the delays. The company assured its staff that the balance of their February salaries would be paid once the rights issue funds became accessible.

Additionally, Byju’s cited banking delays due to a long weekend as a reason for the further delay in salary reflection in employee accounts, promising resolution by the following Monday.

Legal battles and leadership challenges

The ongoing financial woes are further complicated by legal battles, with Byju's and its investors presenting their cases to the National Company Law Tribunal (NCLT) and the Karnataka High Court.

Last month, a group of investors organized an extraordinary general meeting (EGM) to remove founder Byju Raveendran, Divya Gokulnath, and Riju Raveendran from the board and change the company's current leadership. 

However, Raveendran said that the resolutions passed at the EGM are illegal and not valid, and he will continue to lead the company as CEO.

It's worth mentioning that the Karnataka High Court also stated that until it delivers a final verdict, any resolutions made at the EGM will not be considered valid.