Byju’s had roped in Mohan in September to cut costs and restructure its India operations, but the business he leaves behind has shrunk considerably, according to two people with knowledge of the developments at the company.
The online tutor had “one of its worst seasons” in the January-March quarter, when most sales are booked, one of them said.
Also, “the company’s outstanding debt has mounted to more than $200 million in India and around $200-250 million in the US. This includes the $40 million it is supposed to pay to the bondholders every quarter,” the second person said. Both of them spoke on condition of anonymity as the company hasn’t announced its financials for FY23 yet (Also read: No rosy picture as Byju’s finally files its FY22 earnings).
Byju’s has disputed the bondholders claims after they accelerated the payment last year, and is embroiled in a legal tussle with them. The company, once valued at over $22 billion, has been unable to access the $200 million raised from its recent rights issue following a court order, even as dues owed to employees, debtors and vendors have increased.
An executive close to Raveendran disputed the debt figures, saying the outstanding amount stood at $100 million for India and not more than $50 million in the US. “Most of the liabilities will be met by the recent fundraise through the rights issue,” this executive said, adding, “The performance in FY24 has been flattish.”
“The speculated numbers quoted in your query about our India and US liabilities are grossly inaccurate,” a spokesperson for Byju’s said.
Mohan, who previously was CEO at rival edtech company UpGrad India, and had served as Byju’s chief business officer in an earlier stint, will transition into an external advisory role, Byju’s said in a statement on Monday.
Byju’s also announced plans to restructure its operations and consolidate its businesses into three divisions—online classes and tuition centres, the learning app, and the test prep platform—to optimise costs.
Raveendran, who oversaw the firm’s fundraising efforts, will now oversee daily operations. With Mohan on his way out, Raveendran will also lead the India business, the company said.
Almost all of Byju’s employees now work remotely, and the company’s sales, both at the parent level and at Aakash, the crown jewel Byju’s acquired in 2021 for nearly $1 billion, have taken a hit, the second person quoted earlier said.
“Mohan was not a KMP (key managerial person) and was leading mostly operations for the company, with the HR and finance departments being directly monitored by Raveendran,” this person added. “He just ensured the burn rate was brought down and the company continued its operations.”
“The changes follow an extensive seven-month operational review and cost optimisation exercise led by outgoing Byju’s India chief executive officer Arjun Mohan,” the company said in a statement on Monday.
The company’s battle with shareholders escalated last month when four key investors—Prosus NV, General Atlantic, Sofina, and Peak XV Partners—supported by Tiger Global and Owl Ventures, moved the National Company Law Tribunal highlighting their concerns about Byju’s $200-million rights issue, which was priced at a 99% discount to the company’s peak valuation of $22 billion.
This decision was one of several resolutions aimed at tackling financial mismanagement, and compliance and governance issues at Byju’s. These investors had also passed a resolution at an extraordinary general meeting seeking the ouster of Raveendran from the company, a move the founder has termed invalid.
Last month, Byju’s extended an olive branch to investors who did not participate in its rights issue so they could avoid further dilution of their shareholding in the company, after it secured more than 50% votes to increase its authorised share capital.
Byju’s is also at loggerheads with its $1.2-billion term loan B bondholders, who have sued the company for technical default after it failed to publish its FY22 financial results in time, and for not allowing WhiteHat Jr, which Byju’s acquired for $300 million in 2020, to stand as a guarantor for the loan.
After failing to access the $200 million it had raised in the rights issue, Byju’s has delayed salary payments and earlier this month laid off more than 500 employees.
In recent months, about 1,500 employees have left Byju’s amid the escalating crisis, raising doubts about the company’s ability to continue as a business. Besides, Byju’s has vacated many of its offices nationwide to cut costs, retaining only its headquarters at IBC Knowledge Park in Bengaluru, according to media reports.
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Published: 15 Apr 2024, 10:31 AM IST