Cash-strapped ed-tech major BYJU's, in a letter sent to employees, has said it won't be able to pay March salaries on time due to "restrictions" on the funds raised through its recent rights issue. The development comes after the Byju Raveendran-led company failed to pay full salaries to most of its staff in February 2024 as well.

"We are writing to you today with a heavy heart but with a message of hope and reassurance. We regret to inform you that there will again be a delay in the disbursement of salaries," BYJU's says in an internal letter to its employees.

The Bengaluru-based company has blamed a few of its "misguided foreign investors" -- Prosus, Peak XV Partners, General Atlantic, Chan-Zuckerberg Initiative -- for causing problems. They obtained an interim order from the court in late February 2024, which restricted the usage of the funds raised through its $220 million rights issue. The company says the irresponsible action by these "4 foreign investors" has compelled it to "temporarily hold the disbursal of salaries" until the restriction is lifted.

Posing full faith in the Indian judicial system, BJYU's says it is waiting for a favourable outcome that will enable it to use the funds raised through the rights issue and alleviate the financial challenges it is facing currently.

BYJU's says it is also working on a parallel line of credit and the employees could receive salaries by April 8, 2024. "...regardless of the court verdict, we are following a parallel line of credit to ensure that you receive your salary by 8th of April.”

BYJU's claims it has the necessary vote to increase the authorised capital for the rights issue. It means that once the restrictions on using the raised funds are lifted, the company says, it can meet all its salary commitments.

BYJU's founder and CEO Byju Raveendran again appealed to disgruntled investors to work in a “collaborative” spirit. "We hope litigating investors would have a reasonable spirit in not frustrating our daily lives any longer."

BYJU's says it shares employees' frustration because of these circumstances. "We are confident that justice will prevail and the financial constraints will be resolved soon."

There’s no clarity on the stance of dissenting investors. However, they seem in no mood to budge even as BYJU's has offered 72 more hours for them to subscribe to the recently floated rights issue, which if not subscribed could dilute their shareholding in the company. The CEO had last week appealed to them to come on board and resolve the issues by participating in the rights issue.

The next hearing in the "mismanagement and oppression" case filed against BYJU's is on April 4, 2024. While dissenting investors own around 30% stake in BYJU's and co-founders including Raveendran, his wife and co-founder Divya Gokulnath and brother Riju Ravindran hold a 26% stake. BYJU's investor board members from Prosus, Peak XV, and Chan Zuckerberg Initiative stepped down last year.

BYJU's statutory auditor Deloitte Haskins & Sells also quit last year citing a long delay in the ed-tech startup's financial statements for the year ended March 31, 2022. Following the auditor's resignation, Byju's appointed BDO (MSKA & Associates) as its new auditor.

BYJU's, which was once valued at a staggering $22 billion, has seen its valuation cut over the past two years. In January this year, U.S.-based asset manager BlackRock slashed the implied valuation of the Indian startup by 95% to $1 billion. The losses of the ed-tech startup widened manifold to ₹8,245 crore for the financial year 2021-22. BYJU's posted a loss of ₹4,564 crore in FY21.

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