BYJU'S in turmoil: Delayed PF, shareholder criticism, more offices shut
What's the story
It is another trouble-laden day for edtech giant BYJU'S. The company, which saw three non-promoter directors resign recently, was criticized by Prosus, its largest external investor.
The Netherlands-headquartered investment group called out the start-up's governance. The criticism comes amid reports of BYJU'S delaying payment of provident fund (PF) to most of its employees.
Last month, the EPFO had asked BYJU'S to regularize PF payments.
Context
Why does this story matter?
Over the past 18 months, BYJU'S has been through a lot of issues. The company has had problems with investors, creditors, and regulators.
On top of that, it has also found it hard to raise funds. The start-up was once valued at $22 billion.
The events of the last few months have brought it down to $5.1 billion.
Investors
BYJU'S regularly disregarded advice and recommendations: Prosus
BYJU'S had attributed the resignation of board members to their shareholding falling below the minimum requirement. Prosus's statement, however, negates BYJU'S claims.
In a statement, Prosus said the start-up's reporting and governance structures did not "evolve sufficiently for a company of that scale."
Prosus also criticized BYJU'S executive leadership, saying they regularly "disregarded advice and recommendations" related to various matters.
Resignation
Prosus's representative resigned due to inability to fulfill fiduciary duty
The director representing the shareholder stepped down "after it became clear that he was unable to fulfill his fiduciary duty to serve the long-term interests of the company and its stakeholders," Prosus said.
Prosus has been one of the earliest backers of the edtech company. Its statement about the firm's governance is a clear indication of how things have been.
PF
BYJU'S delays PF payments again
Meanwhile, the company is continuing its habit of delaying PF payments to employees. Per data from the Employee Provident Fund Organisation (EPFO), the start-up has only made PF contributions toward 738 employees for June.
In the previous months, it was 25,000. In June, the company released PF payments of several employees for April and May after reports showed that it has been slacking.
Office
BYJU'S has also vacated office space in Gurugram
The delay in PF payment could be a sign of the cash crunch BYJU'S is facing. The company is even vacating its office spaces to cut costs.
Yesterday, Moneycontrol reported the start-up vacated its offices in Bengaluru. The company attributed it to improving "operational efficiencies."
Now, according to the Economic Times, BYJU'S has vacated office space in Gurugram as well.