True entrepreneur is a war leader: Raveendran comparing Byju's crisis to war

While addressing the top leadership at edtech firm Byju's, the founder Byju Raveendran, compared the crisis the company is currently faced with to fighting a war on several fronts.

Raveendran described a "true entrepreneur" as a "war leader".

"What Byju’s is going through can only be seen as a war on multiple fronts against all odds," he said, according to reports. Further, he said that they have won several battles, but they had to win some more.

Rise and fight

As their "commander", he hoped with all his heart, that they would now "rise and fight" alongside him, he was quoted as saying, reported Business Standard.

A person familiar with what had transpired said that the beleaguered founder of the ed-tech company has, in the past few months, pumped in about ₹4,000 crores of personal capital into Byju’s to battle the immediate challenges. He is reported to have said that everyone thinks he is a billionaire, but he has invested a major portion of his wealth back into the company.

According to a PTI report, Raveendran has recently raised money by mortgaging home and real estate assets owned by family members to pay salaries.

"There is about ₹50 crore gap per month in operational expenses where a large component is salary. Promoters have pledged shares, home, and some other real estate assets of family members to bridge the gap," PTI quoted a source as saying.

Challenges facing Byju’s

Raveendran outlined the major challenges facing the company, and was confident that Byju’s would overcome them in the next three months. He assured the management team that the company was in better shape than it was six months ago.

The first challenge he discussed with the team was the litigation surrounding the Term Loan B (TLB), which had its origins in a delayed audit and demands for a full refund from TLB lenders. He was hopeful that by selling Epic, a Byju’s subsidiary in the US, and another subsidiary Great Learning, this challenge would be resolved and there would be remaining funds to tackle the current liquidity crunch. The company hoped to raise $800 million to $1 billion through the sale of these assets.

The second challenge he mentioned was the closure of the FY23 statutory audit, which he said would be completed soon.

The third challenge he listed was the showcause notice the company received from the Enforcement Directorate (ED) for alleged violations of foreign exchange regulations, while attracting foreign investments into the company from 2011 to 2023. Raveendran seems to have clarified that the notice related to procedural deficiencies under FEMA (Foreign Exchange Management Act), and that most of the issues had already been addressed.

The fourth challenge, said Raveendran, was the litigation around the Davidson Kempner (DK) loan raised against Aakash Educational Services Limited (AESL). He said that this issue had been settled after Ranjan Pai, the chairman of Manipal Education and Medical Group, took over the loan. He said that Aakash was now ready for a record-breaking admissions season.

The fifth challenge, he admitted, was that of achieving profitability at the group level by optimising the company’s resources.

Turnaround business plan

At the meeting, Byju’s India CEO, Arjun Mohan, made a presentation about the company’s turnaround business plan that included the right-sized workforce and accountability. He emphasised that selling the right products to the right people without maximising sales was the approach the company had to take.

Mohan said the plan to increase productivity included using the latest technological developments, especially in the area of artificial intelligence, in all facets of the business like product, sales, and marketing. He said the plan was to better monetise the existing assets, and was confident that the Byju’s Tuition Centres (BTCs) would generate cash profitably and push the frontiers of hybrid education.

Several team members thanked Byju Raveendran for his efforts in the last 18 months. He concluded by assuring them that Byju’s would be back to “the heights where it belongs” in a few months.

The company is said to have called for an annual general body meeting on December 20.