India’s most successful start-up, Byju’s, is in crisis

The tech giant promises it will release its financial results after half its board quit, 3000 employees were laid off and its offices were raided.

India’s most valuable start-up is in crisis. Picture: Byju’s

EdTech giant Byju’s has promised it will release its long-awaited financial statements after half its board quit, 3000 employees were laid off and its offices were raided by police over suspected financial crime.

Byju’s, which counts footballer Lionel Messi and Bollywood actor Shah Rukh Khan as brand ambassadors, describes itself as the “world’s largest education technology company” and says it works with more than 150 million students worldwide.

The company is often referred to as India’s most successful start-up, valued last year at A$33 billion, but it has been embroiled in scandal for months.

Embattled tech company Byju’s has promised it will release its financial results after months of scandal. Picture: Byju’s

Some 3000 of its reported 50,000 employees have been laid off in the past year alone, including between 500 and 1000 staff members who were told to walk earlier this month.

In April, the company’s offices were raided by India’s financial crime unit over allegations it had broken foreign exchange laws while accepting 280 billion rupees (A$5.1 billion) from foreign investors.

Law enforcement officials said they summoned Byju’s founder and CEO, Byju Raveendran, during the raid, but he did not appear.

Byju’s and its lenders are also tangled up in US legal cases as creditors demand early repayment of an A$1.8 billion loan.

Byju’s founder and CEO, Byju Raveendran. Picture: Byju’s

Now, the embattled education technology company, which provides tutorials to school students, has told investors it will file its long-awaited 2021-2022 earnings in just a few months.

Byju’s leadership, including Mr Raveendran and chief financial officer Ajay Goel, briefed about 75 shareholders on Saturday to address their concerns, according to local media.

Mr Goel said Byju’s would submit its 2021-2022 results by September — more than a year after it first promised to deliver them in August 2022 — and its 2022-2023 results by December.

Byju’s provides online tutorials to school students. Picture: Byju’s

The promise comes after Byju’s was abandoned by advisory firm Deloitte, which announced on Thursday it was severing ties with the company over its “long-delayed” financial statements.

Deloitte said there was a “significant impact” on its ability to audit the company as it had not received financial records from Byju’s, despite asking for them several times.

On the same day, it was revealed that three of the company’s board members — who represented investors Peak XV Partners, Prosus and Chan Zuckerberg Initiative — had walked, citing concerns over the audit delays and dealings with lenders.

Their departures meant Byju’s board was made up only of Mr Raveendran, his wife Divya Gokulnath and his brother Riju Raveendran — though the company says it is looking to hire new independent board members.

After an exodus, the company’s board is made up of founder Byju Raveendran, his wife Divya Gokulnath, pictured here, and brother Riju Raveendran. Picture: Byju’s

Byju’s has become caught up in the so-called “tech wreck”, in which mammoth technology companies that boomed during the pandemic have laid off incredible numbers of staff and even collapsed as their services became less needed.

Founded in 2011, it rode the wave of online learning with a valuation that shot up from A$7.5 billion pre-pandemic to A$33 billion in 2022.

This year, though, Blackrock — an investment company that owns a small number of Byju’s shares — slashed its internal valuation by more than 60 per cent to A$12.3 billion.

Byju’s position is mirrored by Thailand-based tech manufacturer Stark, which has also declined to share its financial results as its stock market value crashed by more than 99 per cent in just a few weeks.

Stark, which primarily makes electrical cables, is embroiled in an accounting scandal that alleges it bolstered its financial statements with fake names and payments.

Originally published as India’s most successful start-up, Byju’s, is in crisis