In a bid to address the financial challenges facing tech giant Byju’s, founder Byju Raveendran took a strategic step by pledging two properties, including his family's residences in Bengaluru and an under-construction villa in Epsilon, to secure a loan of $12 million. This financial move was aimed at disbursing salaries to approximately 15,000 employees of Byju’s parent company, Think & Learn Private Limited, amidst the company's ongoing cash crunch.
According to a Bloomberg report, the collateralized funds derived from the pledged properties were instrumental in meeting the payroll obligations of the workforce. Byju Raveendran's decision to leverage personal assets reflects the challenges the tech firm is grappling with, encompassing not only financial constraints but also legal disputes, notably concerning a defaulted interest payment on a $1.2 billion term loan.
The founder has adopted a multi-faceted approach to address these challenges, pledging all his shares in the parent company and raising substantial debts amounting to approximately $400 million, as outlined in the Bloomberg report. Additionally, Raveendran returned $800 million raised through share sales in previous years, thereby depleting his available cash reserves.
Byju has encountered hurdles over the past year, marked by the necessity to lay off 2,500 employees in a cost-saving measure. This trend continued with around 1,000 more job cuts earlier this year, accompanied by requests for voluntary resignations from remaining staff members.
The financial strain has also impacted the recruitment process, with reports indicating a deferral of offer letters to incoming employees for six months. Some individuals anticipating joining the company have received notifications of further delays, extending their prospective start dates until January 2024, according to Business Today.
Adding to the complexities, the Enforcement Directorate (ED) initiated an investigation on November 21, revealing alleged forex violations by Byju’s amounting to Rs 9,000 crore. The inquiry followed searches at three Bengaluru premises related to Byju Raveendran and 'Think & Learn Private Limited' under the Foreign Exchange Management Act (FEMA) in May. Byju’s, however, has denied any association with FEMA violations, countering the reports.
