Exits Continue At BYJU’S: Now, Two Independent Directors Of Aakash Tender Resignations

Edtech decacorn BYJU’S saga of troubles continues to unravel. In a major development, two independent directors of its coaching arm Aakash Educational Services Ltd (AESL) have reportedly quit now. 

Sources told VCCircle that two lawyers associated with legal firm Shardul Amarchand Mangaldas & Co – Amit Khansaheb and Vishruta Kaul – submitted their resignations recently. 

The two lawyers also confirmed their resignations. “We would like to clarify that our position as (former) directors of AESL was accepted by each of us in our independent capacity as legal professionals and was not in any way connected to Shardul Amarchand Mangaldas & Co,” the publication quoted Khansaheb and Kaul as saying. 

There is no clarity on what prompted the departure of the duo from the company. This comes in the middle of a protracted legal dispute between BYJU’S and its lenders, with a potential debt crisis looming over the edtech decacorn. 

However, people close to the company told the publication that the two lawyers were appointed as interim directors in an individual capacity during BYJU’S acquisition of Aakash to ensure ‘a seamless transition and to support its growth plans’.

Another person privy to the development claimed that there was no ongoing dispute between the duo and the shareholders.

“Their resignation signifies the fulfillment of their temporary responsibilities, not any dissatisfaction or disagreement within the company. AESL is currently in the process of expanding its board to align with the company’s broader aspirations for the IPO next year,” the person was quoted as saying. 

Inc42 has reached out to BYJU’S for a comment on the latest development. The story will be updated on receiving a response from the company.

The new development opens up another front for the beleaguered edtech giant, which has already been plagued by the departure of a slew of key investor representatives from its board. Last month, three big names on the BYJU’S’ board – Peak VX Partners’ (formerly Sequoia Capital India) GV Ravishankar, Chan Zuckerberg Initiative’s Vivian Vu, and Prosus’ Russell Dreisenstock – quit. 

BYJU’S auditor Deloitte Haskins and Sells also resigned citing the delay by the company in filing its financial statements for FY22. 

Earlier, reports said that the nominee of private equity firm Blackstone also resigned from the board of Aakash over a dispute with the company. 

BYJU’S Multiple Battles

Much has unfolded for the country’s most-valued startup in the last one year. Its net loss soared 20X year-on-year (YoY) to INR 4,588 Cr in FY21. It has also received a lot of criticism from corporate governance lapses as it is yet to file its financial statements for FY22 and FY23.

Amid the slowdown in business after the pandemic boom and the ongoing funding winter, BYJU’S has fired over 5,000 employees in the last 18 months or so in its bid to cut costs. 

Meanwhile, the Enforcement Directorate (ED) conducted raids at premises linked to the company in relation to its investigation in a case of alleged violation of foreign exchange norms. 

The biggest issue seems to be its battle with its creditors and a potential debt crisis. BYJU’S, which took a $1.2 Bn term loan B (TLB) in 2021, stopped payments to its TLB creditors last month and even sued one of the lenders in the New York Supreme Court. 

Many shareholders, including BlackRock and Prosus, have also slashed the valuation of the startup on their books. While BYJU’S was supposed to raise a mammoth $1 Bn, there has been no clarity on which investors have lined up for investments, barring Davidson Kempner, which too seems to be re-evaluating its options. 

Reports also surfaced recently that the investors sought ouster of Byju Raveedran as the CEO of the company. However, two different investors denied any such development to Inc42. 

BYJU’S also appears to be on the radar of the Centre as the Ministry of Corporate Affairs is said to be looking at the possibility of involving the Serious Fraud Investigation Office (SFIO) to probe the delay in its financial reporting.