Vantage | Does Byju's have a plan beyond pledging its CEO's houses?

Reports say the founder and CEO of Byju’s, Byju Raveendran, has pledged two of his houses. Both of them are in Bengaluru. The houses have been offered up as collateral. In return, he’s taken out a loan of 12 million dollars. This tells you how bad things are. In July last year, Byju Raveendran was worth 3.6 billion dollars. He was on the Forbes billionaire list, and now he is pledging his house to pay his employees. Of course, the company has not confirmed this, nor has Raveendran. But reports say the loan was used to pay 15 thousand employees. In simple words, the company is cash-strapped. You need money to keep a firm running, and Byju’s does not have that right now. But pledging houses is not a long-term solution, as one can’t just pile loans on loans. especially if someone like Byju Raveendran. Reports say he has already pledged his shares in the company. He raised around 400 million dollars from that, and he has also sold some of his stake in Byju’s, which brought in 800 million dollars. So it’s not just the firm; Byju’s-the company and Byju-the man, both are short of money. So what’s the way out? The legal issues have to be sorted out. Byju’s is facing three major cases. The first is from the BCCI, the Indian cricket board, which is accusing Byju’s of defaulting on payments of around 158 crore rupees (18 million dollars). Byju’s had a branding deal with the BCCI; Byju’s had sponsored the Indian jersey starting in 2019, which was supposed to last until the end of 2023. But last year, Byju’s pulled out simply because there was no money left. So the BCCI had to find last-minute replacements. And this sum of 158 crore rupees covers that period. Now, the case has been filed at the National Company Law Tribunal (NCLT). Byju’s says they want to resolve the issue amicably. So they might plan to pay up.

The second case involves the Enforcement Directorate (ED) which is a much more serious case. The ED sent a notice to Byju’s last month that said that the company violated India’s foreign exchange rules. We’re talking about a lot of money here — more than 9,000 crore rupees. 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, Byju’s owes around 1.2 billion dollars to lenders abroad. Those lenders have sued the company, because interest has not been paid. That 1.2 billion dollars is the biggest challenge for Byju’s. Unless it is repaid, there is no comeback. In September, Byju’s reached a deal with the lenders. They promised full repayment in six months. Out of which, 300 million would be paid within three months that means by December. And how will Byju’s manage that? Reports say by selling off key assets. Like reading platform’s epic and great learning, if all goes well, Byju’s 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’s survival. The question is: Does Byju’s have a comeback plan? Well, Byju’s annual general meeting is scheduled for December 20. 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. It is highly improbable that a comeback is on Byju Raveendran’s mind. He will be more worried about bankruptcy, between the BCCI, the ED and the lenders. It’s like a patient with AIDS, Cancer and Pneumonia. The question is who will drive the final nail? Views expressed in the above piece are personal and solely that of the author. They do not necessarily reflect Firstpost_’s views._ Read all the  Latest News ,  Trending News ,  Cricket News ,  Bollywood News , India News  and  Entertainment News  here. Follow us on  Facebook ,  Twitter  and  Instagram .