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Explained: No end in sight for Byju’s woes; what went wrong?

The year 2023 has been a year of challenges for Byju’s. Storyboard18 gives a peek into all the issues that have plagued the financially beleaguered edtech company.

By  Kashmeera SambamurthyDec 4, 2023 3:00 PM
Explained: No end in sight for Byju’s woes; what went wrong?
In early 2023, Byju’s initiated a wave of layoffs in order to cut costs. Around 1,000 employees (including freshers) across departments were let go over normal or WhatsApp calls. The engineering team’s headcount fell by 300. (Image source: Moneycontrol)

The year 2023 has been a rough one for Byju’s, with questions being raised over its financial state and its operations. On Sunday i.e. December 3, it was reported that around 1,000 staffers have been impacted at the edtech company due to the delay in payment of salaries for November.

The affected employees belong to Byju's, Think & Learn (the parent company). Byju’s has 14,000 employees. The company has, however, blamed the delay on a technical glitch and has assured that the payment would be processed by today.

Byju’s surfaced once again in the news; this time for defaulting on paying the sponsorship dues of Rs 150 crore to the Board of Control for Cricket in India (BCCI). BCCI initiated insolvency proceedings against the edtech platform’s parent company Think & Learn before the National Company Law Tribunal (NCLT), a media report said.

In July 2019, Byju’s had replaced smartphone handset brand Oppo as the Team India jersey sponsor. The sponsorship which was valid till March this year was renewed in June this year for $ 55 million.

The edtech platform was paying Rs 4.61 crore per bilateral match in India and Rs 1.56 crore per international match organised by the International Cricket Council and Asian Cricket Council.

The problems don’t end here. The Central Consumer Protection Authority penalised Byju’s to the extent of Rs 10 lakh for allegedly publishing false and misleading ads on its IAS coaching programme. CCPA also ordered a compliance report within 15 days of the order. Byju’s is all set to appeal.

As per CCPA, Byju’s did not submit any data which justified their claim that in 2013, out of 1,228 civil service seats that were filled, 62 were from the edtech company. The order also mentioned that Byju’s did not submit fee receipts and consent forms of the candidates who were selected.

Storyboard18 digs deeper into the issues that plagued the edtech platform.

Mass layoffs and changes in leadership

In October, it was reported that Byju’s undertook an exercise to reduce the workforce by 3,000-3,500 whereby they would put an end to duplication in roles across the organisation.

In early 2023, Byju’s initiated a wave of layoffs in order to cut costs. Around 1,000 employees (including freshers) across departments were let go over normal or WhatsApp calls. The engineering team’s headcount fell by 300.

In September, Arjun Mohan, who was the former chief of upGrad was appointed as the Chief Executive Officer of Byju’s India operations where he replaced Mrinal Mohit who left the company to pursue personal aspirations, stated a report.

In the same month, Byju’s had announced that it will reduce its workforce by 11 percent, letting go of 4,000 employees. This was a part of a restructuring exercise undertaken by Mohan as the company faced a markdown in its valuation and a severe funds crunch a media report highlighted.

There were several changes at Byju’s that saw many professionals quit their positions. Prathyusha Agarwal, Chief Business Officer, Himanshu Bajaj, Business Head of Tuition Centres and Mukut Deepak, Business Head for Class 4 to 10 put in their papers.

Cherian Thomas, who was the senior Vvice-president for international business at Byju's, had resigned to join US based Impending Inc as CEO. Thomas played an integral role in setting up the US operations at Byju’s. He was also responsible for leading the educational gaming business of Byju’s named Osmo as the CEO.

On November 27, Jiny Thattil replaced Anil Goel as the group Chief Technology Officer.

Last year, the edtech company had laid off 2,500 employees and stated that the macroeconomic conditions made the company take such a step. Also, around 600 employees were laid off at Byju’s group companies - White Hat jr and Toppr in order to drive efficiency in cost.

What is currently happening?

Byju’s is currently battling a severe crunch in funding. The top shareholders at Byju’s have demanded that the company file the audited financials for the year ended March 31, 2023 soon.

Ranjan Pai, Chairman of Manipal Education and Medical Group infused a capital of Rs 250-270 crore in fresh funding a few weeks ago, a media report said. This capital is separate from the Rs 1,400 crore investment he made on November 10 in order to help Byju’s clear its debt to US lender Davidson Kempner.

The report cited that Byju Raveendran, Founder of the company, had in exchange, pledged a part of his personal stake in Aakash Institute, the subsidiary of Byju’s. Raveendran holds about 27 percent stake in Aakash. The financially beleaguered company had made a promise to its shareholders that by this month, they would file FY23 results which had been delayed.

So far, only FY22 results are out which is 18 months old. They were filed after a delay of more than a year. The FY21 results were filed after an 18-month delay in September 2022.

Raveendran, his wife Divya and brother Riju together with its top management and employees hold a 25 percent to 27 percent stake in Think & Learn. It was further revealed that Raveendran had ensured rights for himself in shareholding agreements. This protected his position in the company as well as on the board, stated an article.

On June 22, G V Ravishankar, Managing Director at Peak XV Partners, Russell Dreisenstock, Prosus and Vivian Wu Chan Zuckerberg Initiative stepped down from the board leaving only the Raveendran family on board, mentioned in the report.

Byju’s has also closed the due diligence process for the sale of its subsidiary Epic and is hopeful that it will generate $ 400 million. Also, another group asset of Byju’s, Great Learning is being sold.

Another reason for Byju’s considering fresh funding is that the sales proceeds of Epic and Great Learning will go to the creditors who had lent $1.2 billion in November 2021.

Adding to their woes, on November 21, the Enforcement Directorate (ED) issued show cause notices to Byju’s and Raveendran, in relation to violations involving Rs 9,362.35 crore under the Foreign Exchange Management Act (FEMA).

First Published on Dec 4, 2023 3:00 PM