In India, your house has a special role to play. It’s not just a place where you live, it’s a lot more. Buying a house is the first priority for many Indians. Selling or pledging it is the last resort. And that’s where Byjus Ravindran is at, the founder and CEO of Byjus. Reports say he has pledged two of his houses, both of them in Bangalore. They’ve been offered up as collateral. In return, he has taken a loan of $12 million. It tells you how bad things are. In July last year, Byjus Ravindran was worth $3.6 billion. He was on the Forbes Billionaire’s list, and now he’s pledging his house to pay his employees. Of course, the company has not confirmed this. Neither has Byjus Ravindran himself, but reports say the loan was used to pay $15, you need to pay $15,000 employees. In simple words, the company is cash-strabbed. You need money to keep a firm running. Byjus does not have that right now. But pledging houses is not a long-term solution. You can’t just pile loans on loans. Especially if you’re a Byjus Ravindran. Reports say he has already pledged his shares in the company.
He raised around $400 million from that. He’s also sold some of his stake in Byjus . That brought in another $800 million. So it’s not just the firm, Byjus , the company, and Byjus , the man, both are short on money. So what’s the way out? First, the legal issues have to be sorted out. Byjus is facing three major cases. The first is from the BCCI, the Indian Cricket Board. They’re accusing Byjus of defaulting payments. Of how much? Around 158 crore rupies, which is around 18 million dollars. You see, Byjus had a branding deal with the BCCI. They sponsored the Indian Jersey. It started in 2019. It was supposed to last until the end of this year, 2023. But last year, Byjus pulled out. They simply had no money left, so they pulled out. So the BCC had to find last-minute replacements. This 158 crore covers that period. Now the case has been filed at the NCLT, the National Company Law Tribunal, NCLT. Byjus says they want to resolve this issue amicably, so I guess they plan to pay up. The second case involves the ED, that is the Enforcement Directorate. It’s also a much more serious case.
The ED sent a notice to Byjus last month. And what did it say? That the company violated India’s foreign exchange rules. We’re talking about a lot of money here. More than 9,000 crore rupies. An investigation is currently underway. There could be a fine at the end of it. And finally, the third legal case, arguably the most important one. Byjus owes around $1.2 billion to lenders abroad. 1.2 billion. These lenders have sued the company. Why? Because interest has not been paid. That’s 1.2 billion is the biggest challenge for Byjus. Unless it is repaid, there is no come back. So what is the plan? In September, Byjus reached a deal with the lenders. They promised full repayment in six months, out of which 300 million would be paid within three months, meaning by December this month. And how will Byjus manage that? Reports say by selling off key assets like Reading platform, Epic, and Great Learning. If all goes well, Byjus could earn one billion dollars from those sales just short of the loan amount. But that’s not even half the job done. Paying off loans is not a business strategy, it is survival. The question is, does Byjus have a plan beyond that?
A comeback plan? Their AGM is scheduled for December 20th, 20th. Agm is the annual general meeting. We should have more clarity by then. But honestly, only a miracle can save this company. It’s the classic Icarus tale of expanding too fast, of taking too many loans and of flying too close to the sun. I don’t think a comeback is on Byjeev Ravindra’s mind at this point. He’ll be more worried about bankruptcy. Between the BCCI and the enforcement directorate and the lenders, it’s like a patient with AIDS, cancer, and pneumonia. The question is, who will drive the final nail?
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I am Atul Sharma, As a full-time blogger, my focus is on delivering news articles on this platform. Your visit to my blog is highly appreciated. Thank you!