Concerned shareholders interrogated the founders and the management of edtech giant Byju’s at an extraordinary general meeting (EGM).
They sought answers regarding funds utilization, with some even demanding that founder Byju Raveendran be ousted to make way for an interim chief executive officer (CEO).
Emergency meeting convened
Shareholders of the company grilled its leadership for pro-forma financials at the EGM following the exit of its long-time auditor and three external directors.
One of the four people who left said, “Shareholders had called for an emergency EGM, demanding disclosure of pro-forma financials and the end use of the $910 million (part of the $1.2 billion raised via Term Loan B, or TLB), whose status is not clear in the company’s books of accounts.”
Key figures quit
Last month, Deloitte Haskins and Sells Llp quit as auditors of Byju’s after six years of service, stating it had written five letters to Raveendran and board members since September 2022 seeking information to conduct its audit work but received no response.
The three non-promoter board members resigned in June.
They are G.V. Ravishankar representing Peak XV (formerly Sequoia India), Vivian Vu, representing Chan Zuckerberg Initiative, and Russell Dreisenstock, representing Prosus.
Post exit only Raveendran, his wife Divya Gokulnath, and brother Riju Raveendran remained as board members.
Byju’s denies CEO ouster talks
Byju’s denied there was any discussion about the CEO stepping aside.
“Byju’s had a very constructive EGM with its 75-plus shareholders on Tuesday morning.
All questions were answered with complete transparency.
There was absolutely no discussion on the change of the CEO.
The discussion points revolved around the early closure of the audit, board reconstitution, process strengthening, and the Aakash IPO”, it said.
Questions over funds use
Investors of Think & Learn Pvt. Ltd, which operates Byju’s demanded answers as to how the company has utilized the funds raised in a $1.2 billion TLB in 2021 since they have not been getting monthly management information system (MIS) reports from the company.
A person close to Raveendran said, “The capital (raised via TLB) is there and is meant to be used for acquisitions. Further details cannot be disclosed at the moment, and this has been conveyed to the bondholders and shareholders.”
“The company did not provide any MIS to its investors. That has also been one of the key contentions,” the person added.
No decision made
The second person among those who left the company said some of the shareholders suggested that Raveendran step down from the board till there is clarity on its financials
“The demand was made for him to step away till the time the dust settles down on the court cases and there is clarity on the financials for the last two years (FY22 and FY23).
However, since not all investors supported that idea and since the family also holds a significant stake, the decision could not be made,” he said.
