The woes of India's largest edtech company, Byju's, grew after three members of its board stepped down.
The three investors who resigned are Peak XV Partners managing director GV Ravishankar, Russell Dreisenstock of Prosus, and Chan Zuckerberg Initiative’s Vivian Wu, according to a report by Economic Times on Thursday, 22 June. In a simultaneous blow, Byju's has also reportedly lost its auditor firm Deloitte.
However, the edtech major has denied the high-profile resignations in a statement. As for conducting audits, BDO (MSKA & Associates) has been appointed by the company for the next five years starting FY22.
"Byju’s firmly denies these claims. Any significant developments or changes within our organisation are shared through official channels and announcements," a company spokesperson was quoted as saying in the report.
These developments add to the recent rumblings of the Bengaluru-based startup, which is currently locked in a legal battle with lenders. What's the latest buzz around Byju's? Here are the key highlights.
Key Highlights of Byju's Downward Spiral
Valuation slashed: Once worth over $22 billion, Byju's valuation was marked down by BlackRock, a minority shareholder, to $11 billion in December 2022 and $8.29 billion in March 2023, Economic Times reported citing company filings.
Financing: But, in May, the startup managed to secure funds through a Rs 2,000-crore investment round from Davidson Kempner Capital. The deal was signed based on the expected cash flows of Byju's test prep subsidiary Aakash Educational Services.
Loan default: The online platform missed an interest payment of about $40 million on a whopping $1.2-billion term loan B, which it had secured from US-based investment management firm Redwood in 2021.
Lender dispute: In May this year, two subsidiary entities of Byju's (Alpha and Tangible Play) were sued by investor Timothy R Pohl and American lender Glas Trust Company for allegedly siphoning $500 million out of Alpha. However, Byju's refuted the allegations by saying that the amount had been used to fund growth plans.
On the other hand, Byju's filed a lawsuit against Redwood for allegedly accelerating the prepayment of the term loan B. The startup further claimed that it had been subject to "predatory tactics" by the lender and has also refused to make loan payments until its dispute with the US-based hedge fund has been resolved.
Massive Layoffs: The Byju Raveendran-led startup has cut thousands of jobs across departments over the past year after growth, as well as funding, of the online education sector slumped post-COVID-19.
Delayed disclosures: Byju's dragged its feet for over 18 months before finally putting out its earnings results for FY21 in September 2022. As per that filing, the edtech company reported an operating revenue of Rs 2,280 crore and losses soared to Rs 4,588 crore. For context, its losses in the previous fiscal year had been Rs 262 crore.
Byju's is yet to release its financial results for the year ending 31 March 2022, as per reports. It is reportedly overdue by eight months.
ED Probe: In April, the Enforcement Directorate (ED) conducted searches of the Bengaluru residence of Byju's CEO Byju Raveendran and the firm's offices in the city. As per an ED statement, the searches were conducted in connection with the company's alleged violations of the The Foreign Exchange Management Act, 1999.