Setback for Byju’s: Rajnish Kumar and T.V. Mohandas Pai Exit Advisory Panel

Introduction

Rajnish Kumar and T.V. Mohandas Pai, prominent figures in India's financial sector, have decided not to continue their roles on the advisory panel of Byju’s parent company, Think & Learn Pvt. Ltd, after their one-year tenure ends on June 30. This marks yet another challenge for the beleaguered online tutoring giant.

A Short-Lived Tenure

Kumar, the former chairman of the State Bank of India, and Pai, the former CFO of Infosys, joined Byju’s advisory panel last year amid significant turmoil. Their appointment was intended to reassure investors concerned about the company’s future following a series of high-profile board exits and ongoing financial difficulties. Despite initial efforts, their tenure has been overshadowed by escalating legal issues and internal conflicts.

Reasons for Departure

Sources close to the development suggest that the mounting legal troubles Byju’s is facing, both domestically and internationally, contributed to Kumar and Pai's decision to part ways with the company. Byju’s is currently entangled in lawsuits from creditors and key shareholders, who are pushing for the removal of founder Byju Raveendran.

Advisory Panel’s Mission and Challenges

The advisory panel had three primary objectives: ensuring the company disclosed its audited financials, assisting Raveendran in rebuilding his team, and improving communication with shareholders. While progress was initially made, the company’s entanglement in various litigations hindered these efforts.

In addition to these goals, the advisory panel also aimed to expand and reconstitute the board, and to negotiate debt settlements with creditors. Despite their departure, Kumar and Pai have stated that they remain available for consultation should the need arise.

Escalating Crisis for Byju’s

The departure of Kumar and Pai represents a significant blow to Byju’s, which was once valued at $22 billion. The company's valuation has plummeted, with Blackrock recently reducing it to $1 billion, and Sequoia Capital (now Peak XV Partners) writing off its investment.

The advisory panel was formed after several board members from Peak XV Partners, the Chan Zuckerberg Initiative, and Prosus resigned, citing poor corporate governance. Around the same time, Deloitte Haskins & Sells, Byju’s statutory auditor, also resigned due to delays in receiving necessary information from the company.

Byju’s financial troubles have led to massive layoffs and delays in salary payments. Most recently, the company’s India CEO, Arjun Mohan, resigned just seven months into his tenure.

Legal and Financial Struggles

Byju’s legal battles include attempts by some shareholders to remove Raveendran as CEO, a move currently being contested in the Karnataka High Court. The company is also dealing with insolvency proceedings in the National Company Law Tribunal.

In the US, Byju’s is embroiled in a dispute with Glas Trust Co., representing 37 lenders over a missing $500 million from a $1.2-billion loan. This has resulted in multiple lawsuits across Delaware, New York, and Miami.

Future Prospects

Despite the setbacks, Byju’s attempted to raise $200 million through a rights issue, but the funds remain inaccessible pending court rulings. The company is also yet to file its financials for 2022-23. When it eventually filed its FY22 financials, Byju’s reported a substantial loss of ?8,245 crore on revenues of ?5,015 crore.

Conclusion

The exit of Kumar and Pai underscores the ongoing challenges Byju’s faces as it struggles to stabilize its operations and regain investor confidence amidst a complex web of financial and legal difficulties.

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Disclaimer:

The information presented in this article has been compiled from multiple sources across the internet. It is intended for informational purposes only and should not be construed as investment advice. Any investment decisions should be made in consultation with a reputable financial advisor. The author and publisher of this article are not liable for any losses incurred by investors or traders as a result of the information provided.