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Byju’s is considered the biggest Indian startup, valued at $22 Billion US Dollars as per the figures of March 2022. However, it has been making consistently heavy losses in the fiscal year 2021. Although it is still the most valuable startup in India, Byju’s faced losses of about 4500 crores in the year of 2021 alone. The data for the following year has still not been made available to the shareholders, leading to speculations of even more losses.
A String of Resignations
The company has not been able to provide financial audit reports for the accounting years ended March 2021 and March 2022 due to the financial crisis that is taking place within the company. In fact, the auditing firm allied with Byju’s, Deloitte Haskins and Sells, resigned earlier due to this failure to provide reports. This firm had been contracted to serve as the auditor to Byju’s for five year until the fiscal year of 2025.
The market was in further chaos when rumors broke out that 3 of the directors of the company had resigned. G V Ravishankar, Vivian Wu and Russell Dreisenstock were the three speculated directors who had resigned from the company. However, representatives from Byju’s released a statement denying these resignations. Byju’s also slammed the spread of fake news through media channels and assured the investors that any big changes in the company would certainly be communicated to them.They also added that verified channels of communication from the company itself should be the only sources of information that could be trusted.
Auditing Troubles
The financial statements for the year ended March 2022 are still available to the public. The deadline for publishing these statements was on September 30th of last year, when a meeting for all the shareholders was to be held.
In the auditor’s statement, Deloitte mentioned that there hadn’t been any communication about the suggested modifications to the fiscal year 2020 reports. There also hadn’t been any accounting books sealed with auditing approval, leading to the release being delayed.
After the resignation of Deloitte Haskins and Sells, Byju’s has put BDO (MSKA & Associates) up to the job of auditing. They have been appointed in this role for the next five years starting in the fiscal year 2022.
The Crisis
At its peak, Byju’s was valued at around $24 Billion dollars, however this figure has fallen down drastically in the new estimates. BlackRock, which is an American investment firm, has estimated that the value of Byju’s stands at around $8.4 Billion dollars as of now. This indicates a sharp decline of 62%.
There have been several issues leading up to the crisis in Byju’s. Earlier, they defaulted on a loan worth $1.2 Billion dollars. They are also involved in a legal battle with the loan-givers. Byju’s has been unable to pay the interest amount on the loan taken, and has called out the loan-givers on their high rate of interest which is “predatory” according to them.
This endangers the shareholders who have their stake in Byju’s. But it also affects the thousands of students who have enrolled and subscribed into educational courses provided by Byju’s. The students who rely on this service may be facing potential shut down of these courses.
Byju’s is considering various measures to overcome its problems, including extensive lay offs and has held talks to invite private investments.
