Bengaluru’s real estate circles were rife with rumours of Byju’s failure to pay rent this June. Was India’s most valuable tech firm about to depart acres of office space? Byju’s business entity, Think & Learn Pvt. Ltd had taken three leased properties, the largest of which was Kalyani Tech Park in Brookfield, which had a monthly fee of Rs 3 crore. Byju’s moved out of much of Brookfield at the end of July, urging its employees to work from home or other locations. A leading property consultancy executive acknowledged that Byju’s had been cutting back on rentals before the exit. “I suppose it was inevitable,” he adds.
Rent delays were not the only red flag
The edtech had relied on statutory contributions such as the workers’ provident fund. According to PrivateCircle Research, a private market intelligence platform, the company’s personnel had decreased from 58,292 in March 2022 to 24,787 by May 2023.
Then, Byju’s statutory auditor and three members of Byju’s board representing its investors left. GV Ravishankar (Peak XV Partners), Vivian Wu (The Chan Zuckerberg Initiative), and Russell Andrew Dreisenstock (Prosus NV) all resigned from the board, citing “differences” with Founder Byju Raveendran. Raveendran, his wife Divya Gokulnath, and his brother Riju Ravindran remained on the board.
Deloitte Haskins & Sells, the company’s auditor with a five-year mandate until 2025, said it had yet to learn when Byju’s planned to finish its 2021-22 accounts or even rectify errors it had made concerning the 2020-21 accounts.
Was Byju’s Making a Plan?
Multiple people close to the investors and the auditor informed anonymously that the promoters had yet to respond to emails concerning the company’s financial reports. According to one source, “the promoters kept telling the investors and auditor that ‘ action is being taken’ or ‘we will come back with a plan.”
Byju’s is dealing with a term loan problem.
Cynics who questioned Byju’s $22-billion valuation (on which it received the company’s past two rounds of investment) are now smug. The company’s worldwide aspirations are dwindling, and its India operations need to be revised. Byju’s is likewise dealing with a term loan problem. The crisis is not promising for India’s startup sector. However, there are lessons to be learned.
Byju’s, which boasted of its participatory learning style from kindergarten to Class 12, remains mum on investor concerns. A new capital infusion is vital, but prospective lenders hesitate to write a large cheque to Byju’s if they need to know what (or how) it has done in the previous fiscal year. (The audited financial reports for fiscal years 22 and 23 have yet to be filed.)
