Byju's crisis: TV Mohandas Pai and Rajnish Kumar to resign from advisory panel

By Consultants Review Team Monday, 20 May 2024

Rajnish Kumar, the former head of the State Bank of India, and TV Mohandas Pai, the former chief financial officer of Infosys, have chosen not to extend their contracts to remain on the advisory board of the troubled edtech company Byju. On June 30, when their one-year term expires, Kumar and Pai want to leave the advisory council.

According to a Livemint article, Rajnish Kumar and TV Mohandas Pai informed Byju Ranveendran, the founder of Byju, of their choice. Their retirement follows a slew of board resignations and financial difficulties that forced the business into lawsuits.

The two seasoned businessmen were on the advisory board that Byju's set up to reassure investors concerned about the company's prospects in light of growing legal issues. 

As to the article citing an unidentified official, the reason for Pai and Kumar's desire to leave Byju's is the several litigation the firm is facing in India and the US, from creditors and important shareholders. Due to poor management, Byju Raveendran is wanted out by the creditors and shareholders.

The panel's three main goals were to improve shareholder communication, assist Raveendran in rebuilding the team, and persuade Byju's to provide its highly regarded financials. The CEO stated in the report that Byju's had a great beginning but later became involved in several legal disputes. According to reports, Raveendran collaborated with the advisory board to enlarge the board and alter the makeup of the board committee. 

BYJU'S REPORT

Byju Raveendran stated that although the lawsuits caused delays in their plans, he would always depend on Pai and Kumar's guidance. "Over the past year, Rajnish Kumar and Mohandas Pai have given me invaluable support." Our plans have been delayed by a few foreign investors' ongoing lawsuits, but their counsel will be valued in the ongoing reconstruction that I am personally spearheading, he said in a statement.

In a statement released late on Sunday, Kumar and Pai stated: "It was agreed that the advisory council's term should not be extended based on our conversations with the founders. Even when the official engagement ends, the company's founders are still welcome to contact us for guidance.We send our best wishes for the future to the company's founders. It is said that their relationship with Byju's was always fixed-term.

THE CRISIS OF BYJU

Blackrock, a firm investor, reduced Byju's valuation from $22 billion in 2022, when it was still one of the most promising companies, to just $1 billion. Sequoia Capital, an additional investor that is now Peak XV Partners, has wiped down its stake in the interim.

After Vivian Wu of the Chan Zuckerberg Initiative, GV Ravishankar of Peak XV Partners, and Russell Dreisenstock of Prosus resigned from Byju's board citing issues with corporate governance, the company's problems got worse. The statutory auditor for Byju, Deloitte, also resigned as a result of the company's failure to provide the required information on time.

Byju's paid overdue pay and laid off thousands of workers amid the mayhem. Arjun Mohan, its chief executive, also resigned.

The National Company Law Tribunal is currently considering many insolvency cases involving Byju's. Byju's $200 million rights issue was authorized by shareholders last month, but the company cannot utilize the money until the judicial proceedings are over.  

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