Byju Raveendran raises personal debt to cover employee salaries

Hyderabad: Edtech company Think and Learn, which owns the Byju's brand, has reportedly paid partial salaries to employees for March. Sources indicate that Byju Raveendran, the Founder and CEO of Think and Learn, utilized personal debt to cover these salary payments. The estimated expense for partial payouts amounts to Rs 25-30 crore, with payments credited on April 20.

The salary disbursements varied between 50-100 per cent, with additional personal debt raised due to blocked funds from a rights issue. However, all teachers and lower-level staff received full salary payments. The mode of raising debt for salary payments raises concerns about long-term sustainability, especially amidst ongoing legal proceedings.

Earlier, Byju's had raised $200 million through a rights issue to cover operational costs, including employee salaries. However, investors, including Prosus, General Atlantic, Sofina, and Peak XV, have taken legal action against the founders and the rights issue, potentially impacting the company's shareholding structure. Court hearings scheduled for April 23 may further complicate the situation, heightening concerns about the viability of debt-funded salary payments.

Meanwhile, Byju's is undergoing organizational restructuring, with Founder Byju Raveendran set to assume a more hands-on role in day-to-day operations following the resignation of CEO Arjun Mohan. The restructuring aims to consolidate business into three verticals, focusing on operational efficiency and sustainable profitability.

Despite facing valuation challenges post-Covid 19, Byju's remains committed to operational resilience. Shareholder approval has been secured for a capital increase to accommodate the raised funds, signalling the company's determination to navigate through current challenges.