Byju’s woes worsen: Rajnish Kumar, Mohandas Pai to step down from advisory panel

Two executives aware of the development said that Kumar and Pai, who had joined the company last year to advise founder Byju Raveendran following a series of board exits and financial woes, have communicated their decision to him.

Byju’s had established the advisory panel naming Kumar, a former chairman of State Bank of India, and Pai, a former chief financial officer of Infosys, as members to assuage investors worried about the company’s future as legal cases mounted against it.

One of the executives cited above said that Kumar and Pai are snapping ties following the company getting embroiled in litigation. Byju’s is facing lawsuits both in India and in the US from its creditors and key shareholders, who want the founder ousted.

The advisory panel’s three main focus areas were to get the company to disclose its audited financials and help Raveendran rebuild the team. Better communication with shareholders was the third part.

On each of these aspects, Byju’s started well “but unfortunately, the company got embroiled in all kinds of litigation”, said the executive.

A second executive, also speaking on condition of anonymity, said that in addition to the three areas, the advisory panel also worked with Raveendran to expand the board, change the composition of the board committee, and help Byju’s settle debt with creditors.

An email sent to Byju’s seeking comment, and text messages sent to Kumar and Pai remained unanswered till press time.

Escalating crisis

The latest development only addes to the woes of Byju’s, once the most valuable homegrown unlisted company, estimated to be worth $22 billion in 2022.

Earlier this year, Blackrock, an investor in the company, slashed Byju’s valuation to $1 billion, while another investor, Sequoia Capital (now Peak XV Partners), has written off its investment in the online tutor.

The advisory panel was set up last July after G.V. Ravishankar of Peak XV Partners, Vivian Wu of Chan Zuckerberg Initiative, and Russell Dreisenstock of Prosus resigned from the board of Think & Learn citing poor corporate governance.

Byju’s statutory auditor at the time, Deloitte Haskins & Sells, also resigned, citing delays in the company sharing information with it.

Raveendran, his wife Divya Gokulnath, and brother Riju Raveendran are the three members of the board.

Multiple legal cases

Byju’s was sanguine when it set up the advisory panel last year. “This council will play a pivotal role in advising and mentoring Byju’s board and its chief executive officer Byju Raveendran on crucial matters that shape the company’s future,” Think & Learn had said in a statement at the time.

Earlier this year, many of Byju’s shareholders, including Prosus, voted to oust Raveendran as the CEO at a special shareholder meeting. Byju’s rejected the move, saying the shareholder meeting was “invalid and ineffective“. The matter is now before the Karnataka High Court, which is still to adjudicate on the matter.

Byju’s has struggled to end its long-running dispute with Glas Trust Co., the trustee representing 37 lenders in the US, over $500 million missing from the $1.2-billion loan the edtech company took. Multiple lawsuits across Delaware, New York and Miami have been filed by both the lender and Byju’s.

The company’s plans to raise money by selling many of the businesses it acquired during the covid-19 pandemic have remained a non-starter amid mounting legal and financial challenges.

Last month, a majority of the company’s shareholders approved a $200-million rights issue, at a 99% lower valuation, but Byju’s cannot use the funds until the hearings at the NCLT and the Karnataka High Court are concluded.

Byju’s is yet to file its financials for 2022-23. When the company finally filed its financials for FY22 in January this year, it reported a loss of ₹8,245 crore on revenue of ₹5,015 crore.