In a significant development, two independent directors of Aakash Educational Services Ltd (AESL), a coaching arm of edtech decacorn BYJU’S, have reportedly stepped down. Sources have revealed that lawyers Amit Khansaheb and Vishruta Kaul, associated with legal firm Shardul Amarchand Mangaldas & Co, recently submitted their resignations.
Lawyers Confirm Resignations and Clarify Their Roles
Both Amit Khansaheb and Vishruta Kaul have confirmed their resignations and clarified their positions. They emphasized that their roles as former directors of AESL were accepted as individual legal professionals and were not connected to Shardul Amarchand Mangaldas & Co. They made these statements in response to queries regarding their resignations.
Uncertainty Surrounding the Departure and BYJU’S Troubles
The reasons behind the departure of the two directors remain unclear. This development comes amidst an ongoing legal dispute between BYJU’S and its lenders, which has raised concerns about a potential debt crisis for the edtech decacorn. However, sources close to the company have suggested that the lawyers were appointed as interim directors during BYJU’S acquisition of Aakash to ensure a smooth transition and support growth plans.
BYJU’S Facing Multiple Challenges
This latest development adds to the challenges faced by BYJU’S, which has already witnessed the departure of key investor representatives from its board. Additionally, the company’s auditor, Deloitte Haskins and Sells, resigned citing delays in filing financial statements for FY22. Reports have also highlighted the resignation of a nominee from private equity firm Blackstone from the Aakash board over a dispute with the company.
BYJU’S has encountered various hurdles in recent times, including a significant increase in net loss for FY21 and criticism regarding corporate governance lapses due to the delayed filing of financial statements. The company has also reduced its workforce by firing over 5,000 employees to manage costs amidst business slowdown and funding challenges. Furthermore, the Enforcement Directorate conducted raids related to an investigation into alleged violations of foreign exchange norms.
The most pressing issue for BYJU’S appears to be its battle with creditors and the potential debt crisis. The company halted payments to its term loan B creditors and initiated legal action against one lender in the New York Supreme Court. Shareholders, including BlackRock and Prosus, have also lowered the startup’s valuation. Reports have suggested that investors have sought the removal of CEO Byju Raveendran, although two investors have denied such claims. The Ministry of Corporate Affairs is reportedly considering involving the Serious Fraud Investigation Office to investigate the company’s delayed financial reporting.
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