Resignations mount at BYJU'S: Aakash's board witnesses departure of two directors

BYJU'S, the prominent edtech decacorn, is facing fresh troubles as two independent directors of its coaching arm, Aakash Educational Services Ltd (AESL), have reportedly resigned. Lawyers Amit Khansaheb and Vishruta Kaul, associated with the legal firm Shardul Amarchand Mangaldas & Co, recently submitted their resignations, VCCircle reported citing sources.

Khansaheb and Kaul confirmed their departures, emphasising that their positions as former directors of AESL were accepted in their independent capacity as legal professionals and were not linked to their firm. The reasons behind their resignations remain unclear. This development emerges amidst an ongoing legal dispute between BYJU'S and its lenders, with concerns of a potential debt crisis hovering over the edtech decacorn, VCCircle report said.

Inside story of BYJU'S

However, insiders familiar with the matter stated that the two lawyers were appointed as interim directors during BYJU'S acquisition of Aakash, serving in an individual capacity to ensure a smooth transition and support the growth plans of the company. According to a report by VCCircle, a source said “Their resignation signifies the fulfilment 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.” AESL is currently in the process of expanding its board to align with its broader aspirations for an IPO scheduled for the following year.

This recent development adds to the challenges faced by the beleaguered edtech giant, which has already witnessed the departure of several key investor representatives from its board. Last month, GV Ravishankar from Peak VX Partners (formerly Sequoia Capital India), Vivian Vu from Chan Zuckerberg Initiative, and Russell Dreisenstock from Prosus all stepped down from BYJU'S board. Additionally, BYJU'S auditor Deloitte Haskins and Sells resigned, citing the company's delay in filing its financial statements for FY22. Previously, the nominee of private equity firm Blackstone had also resigned from Aakash's board due to a dispute with the company.

BYJU'S has encountered numerous challenges over the years. Its net loss surged 20 times year-on-year to Rs 4,588 crore in FY21. The company has faced criticism for corporate governance lapses, particularly its failure to file financial statements for FY22 and FY23. Amid the post-pandemic business slowdown and ongoing funding challenges, BYJU'S has terminated over 5,000 employees in the past 18 months as part of cost-cutting measures.

Furthermore, the Enforcement Directorate (ED) recently conducted raids at premises connected to BYJU'S in relation to an investigation into alleged violations of foreign exchange norms. However, the most pressing issue for the company appears to be its battle with creditors and the looming debt crisis. Last month, BYJU'S ceased payments to its term loan B (TLB) creditors, following which it filed a lawsuit against one of the lenders in the New York Supreme Court. Shareholders such as BlackRock and Prosus have also downgraded the startup's valuation. While BYJU'S was expected to raise a substantial $1 billion, there is currently little clarity on which investors are lined up for investments, with the exception of Davidson Kempner, which is re-evaluating its options.

Recent reports suggested that investors were seeking the removal of Byju Raveedran, the CEO of BYJU'S. However, two separate investors denied these claims. Moreover, the Ministry of Corporate Affairs is reportedly considering involving the Serious Fraud Investigation Office (SFIO) to investigate the delay in BYJU'S financial reporting, indicating that the company has also drawn the attention of the government.