Byju's processes employees' May payout from business collections: Report

Bengaluru-based troubled edtech startup BYJU’S has reportedly processed employee salaries for the month of May on June 3, IANS reported.

This payment comes amid a significant liquidity crisis the company is facing.

"The salaries for the month of May have been processed for BYJU'S employees and will be credited today (June 3). This milestone is particularly significant for BYJU’S as the salaries have been paid from the company's collections for the month," the source told IANS.

What has happened in previous months?

This marks the second consecutive month that employees have received their full salaries after partial payments in February and March.

In April, salaries were met through a combination of revenue and personal debt raised by founder Byju Raveendran, who reportedly secured around Rs 30 crore.

The company's monthly salary expenses are estimated at Rs 40-50 crore. During February and March, only teaching staff and the lowest salary grade employees were paid in full, while others received partial payments.

Byju's ongoing financial challenges

Byju's has faced ongoing financial challenges, leading to significant layoffs and restructuring. Over the past two years, more than 10,000 employees have been laid off. 

The company had sought relief from the National Company Law Tribunal (NCLT) to use proceeds from a $200 million Rights Issue to address liquidity issues, including unpaid salaries and regulatory dues. However, the NCLT did not grant immediate relief, and the matter is set for a hearing on June 6, 2024.

Four investors have opposed the rights issue, accusing Byju's of violating NCLT orders by issuing shares to founders before increasing the authorized share capital.

Addressing the cash crunch

To address the ongoing cash crunch, Byju's has implemented various strategic measures. The report said that the company was able to cover May's salary expenses from monthly business collections. 

The company has also proposed changes in the salary structure for sales executives. Founder Byju Raveendran told sales associates they would receive 100% of sales closed directly into their accounts the next working day, with managers receiving 20% of the same.

This model, currently a four-week experiment, could become permanent based on initial positive feedback, the report said.

Plans for future salary payments

BYJU'S has devised a plan to ensure timely salary payments for at least the next six months. According to Chief Technology Officer Jiny Thattil, outstanding salary dues for February and March will be cleared between June 15 and June 30, with the worst-case date being July 8. Thattil assured staff that there would be no disruption to monthly salary credits over the next six months, the report added.