The 23rd of June in Mumbai (Reuters) One of India’s largest businesses, Byju’s, a leader in education technology with a $22 billion valuation last year, has had difficulties including lawsuits, auditing problems, layoffs, and board-room exits.
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The departure of its auditor, Deloitte, casts doubt on the company’s financials and business practises, dealing a serious blow to one of India’s most successful businesses.
An outline of the issues at Byju’s can be seen below.
WHO RESIGNED FROM THE DELOITTE BOARD AND WHY?
Deloitte informed Byju’s board in a letter that it was leaving the company because Byju has postponed releasing its financial results for the year ending March 31, 2022. Deloitte claimed that despite sending the board numerous letters, it still did not get the required documentation. On this, Byju’s has not responded.
Byju’s 2020–21 accounts were authorised by Deloitte last year after the accounting firm requested that it reclassify several revenue entries.
In a separate development, three Byju’s board members who represented the investors Peak XV Partners (formerly Sequoia Capital India), Prosus, and Chan Zuckerberg Initiative resigned without explanation.
WHAT CONDUCTS BYJU’S?
Byju’s claims that it is the “largest education technology company in the world.” It offers online tutorials for students in academic settings in subjects like maths, physics, and chemistry.
Internet sales increased dramatically during the COVID-19 pandemic. Byju had a $5 billion valuation prior to the pandemic; by the time it reached a value of $22 billion in 2022, it had acquired a number of companies.
It offers executive MBAs for professionals, offline classes, courses for students in the United States, and claims to work with more than 150 million students globally.
MARQUEE INVESTORS, PERILS IN THE LAW
As the pandemic subsided and students resumed attending classes online, Byju’s growth slowed, similar to that of other education companies. Many of its employees have been let off in recent weeks.
Shah Rukh Khan and Lionel Messi, both football players, are brand ambassadors for Byju’s. Among the investors of Byju and its affiliates are Blackstone, Blackrock, General Atlantic, and Tiger Global.
Investors have lowered their valuation expectations in recent months. For instance, according to reports, Blackrock reduced its internal estimate of Byju’s by more than 60% to $8.2 billion.
There are also legal difficulties. In the United States, legal disputes over the restructuring of a $1.2 billion loan have involved Byju’s and its lenders.
BYJU’S FOUNDERS WERE WHO?
Byju Raveendran, the company’s creator, and his wife Divya Gokulnath are in charge of running Byju’s. Being an engineer by trade and having parents who were educators, Raveendran began tutoring friends in mathematics and expanded the company as demand increased. In 2011 and 2015, he introduced Byju’s and its app.
WHAT IS SAID?
With the claim that it is repairing and upgrading them, Byju’s has defended its business and governance procedures. By claiming that Blackrock was a modest shareholder with less than 1% of the company in a media interview, it downplayed the value reduction caused by Blackrock. The company has also downplayed worries about layoffs, claiming that despite having fired some employees, it had hired more.
