Addressing his employees in a town hall meeting on Thursday, Byju Raveendran, co-founder and CEO of edtech company BYJU’S said the company is actively engaged in conversations with investors for a new round of equity fundraising. He said in the event that this fundraising round does not materialise, the company is prepared to explore alternate measures, including the liquidation of existing assets.
“What I understood from his speech is that the company is having a money crunch. He said he is trying to raise money through equity to overcome the crunch. He said at the worst if that is not happening, he has few assets which he can immediately liquidate which will bring capital to the company,” an employee who attended the town hall told Business Today.
Early this month BYJU’s had formally announced plans to launch the initial public offering (IPO) of its subsidiary Aakash Education Services (AESL). The company said the offline coaching chain that it acquired in April 2021 in a deal worth $950 million will go public by the middle of next year.
Raveendran addressed his employees in a virtual town hall and assured them that “the situation is not as bad as what appears in the media.”
The company has been reeling under intense pressure as a series of controversies continue to plague the company, including the resignation of its statutory auditor, Deloitte Haskins & Sells, the departure of board members, and an ongoing legal battle concerning its $1.2 billion Term Loan B (TLB). Raveendran addressed all of those issues in his town hall speech.
Also read: ‘Best of BYJU’S is yet to come’: Byju Raveendran assures employees, addresses departure of board members
Last week, three board members, namely GV Ravishankar of Peak XV Partners, Vivian Wu of Chan Zuckerberg Initiative, and Russell Dreisenstock of Prosus, tendered their resignations from the board of BYJU’S. This development now leaves Byju Raveendran, his wife Divya Gokulnath, and brother Riju Ravindran as the remaining members on the board.
“He said Deloitte’s resignation was at a mutually agreed common ground where they (Deloitte) were not able to complete the reports for which they had to get a new auditor. He cleared very much that the board members’ resignation has nothing to do with Deloitte, it is only a difference in opinion and that he is getting new members to constitute the board. He also said the resigned members will continue to work with BYJU’S because they still hold a good part of the company,” said another employee at the town hall.
Raveendran said the term loan issue seems to have lost its media spotlight as the company has initiated negotiations with the consortium and suggested a resolution to the dispute is on the horizon.
A consortium of lenders, led by investment management firm Redwood which has put in about 70 per cent of the loan capital, is pushing for an acceleration of the repayment of the term loan.
He also tried to offer employees some reassurances about the company’s financial performance, stating that several key verticals have achieved profitability or are nearing the break-even point.
Raveendran said, contrary to what people would believe, out of the five-six organisations which are part of BYJU’S now, three-four are profitable and one or two are breakeven. BYJU’S tuition centre is a future opportunity, and so is still in the investment stage and is not profitable, but he is very positive about it. WhiteHat Jr is not making profits but he said he has plans for it. Aakash is profitable, and the app-based learning is break-even.
The company had previously said that Aakash clocked a three-fold increase in revenue since the acquisition, which is on track to reach Rs 4,000 crore with an EBITDA of Rs 900 crore in financial year 2023-24 (FY24).
“There was a lot of awkwardness in which Byju spoke today. I have attended meetings before where he spoke, normally he is very confident when he speaks. He is optimistic, but was not in his elements today,” one of the employees said.
Also read: ‘If you take money…’: Mohandas Pai, an early investor in BYJU’S, calls for better governance after auditor exit
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