The valuation of ed-tech giant Byju’s, currently standing at $22 billion, is facing significant challenges as the company grapples with delayed financial accounts. Byju Raveendran, the billionaire founder of the company, has assured investors that steps are being taken to address the situation and strengthen the accounting processes.
Recent developments have added to the company’s difficulties. Within a week, Byju’s saw the departure of its auditor and three board members, raising concerns among stakeholders. Raveendran openly acknowledged the shortcomings in implementing effective processes that could have expedited the closure of the accounts. He emphasized the company’s commitment to improving its systems with the help of a newly appointed finance chief and general counsel.
To replace Deloitte Haskins & Sells, Byju’s has engaged MSKA & Associates as its new auditing firm. The company aims to finalize its fiscal 2022 numbers by the end of September. This move is crucial to address the concerns of investors and regain their confidence.
In addition to the accounting challenges, Byju’s faced a setback when it failed to make $40 million in interest payments on a term loan raised in November 2021. This prompted the company to file a lawsuit against one of its lenders in the New York Supreme Court, accusing it of predatory practices. However, the consortium of lenders, collectively owning more than 85% of the $1.2 billion term loan, dismissed the lawsuit as lacking merit.
As tensions with lenders escalated, Byju’s resorted to cost-cutting measures, including layoffs across various departments. Reports indicate that over 1,000 employees, primarily senior staff members with over two years of tenure, are expected to be affected. These measures, while challenging for the employees involved, are seen as necessary to navigate the current financial situation and strengthen the company’s position in the long term.
Adding to the company’s woes, the Enforcement Directorate (ED) conducted searches on Byju’s premises in late April as part of a foreign exchange violation probe under the Foreign Exchange Management Act (FEMA). The ED raided three locations, including two business premises and one residential property belonging to Byju’s CEO, Raveendran Byju, and his company.