The resignation of Deloitte, Haskins, and Sells as Byju’s auditors have sparked major concerns. The auditors cited the company’s failure to implement suggested modifications in their accounts for the financial years ending March 2021 and 2022. Previously, Byju’s had to restate their financial statements for 2021, revealing an expanded loss of 4005 88 crores.
Furthermore, rumours suggest that three directors of the company have resigned from Byju’s board, signalling potential corporate governance lapses. If confirmed, this development could lead to a significant drop in the company’s valuation, possibly below $5 billion.
The EdTech major Byju’s also made headlines recently by filing a lawsuit against its lenders, led by Redford, accusing them of engaging in predatory tactics. The company’s legal battle has brought to the forefront questions about its growth model and raised concerns about the broader startup ecosystem in India. With the recent layoff of 1,000 full-time employees, Byju’s troubles have garnered significant attention, prompting discussions on the challenges faced by startups in the current landscape.
Byju’s known for its online education platform, found itself in a financial predicament as its cash flows declined following the reopening of schools after the pandemic. Additionally, the company embarked on an acquisition spree, purchasing 17 companies, which necessitated substantial funding. To raise the required capital, Byju’s secured a $1.2 billion loan, which was subsequently traded in the market and bought by various hedge funds, including Redford. However, these lenders accused Byju’s of syphoning money from its subsidiaries and exerted pressure on the company, demanding early loan repayment and attempting to change management within the organisation. In response, Byju’s took legal action, alleging predatory practices by the lenders and refusing to pay the $40 million in interest payments due.
The future of Byju’s, once a global name in edtech, appears bleak in light of these recent events, with implications extending beyond the company itself to the entire Indian startup ecosystem. In this episode of News Explained, Nabodita Ganguly is joined by Lokeshwarri SK, Senior Associate Editor, to discuss the ongoing issue. Read the full story here.