Byju’s asserts recovery from crisis as edtech firm approaches profitability
CEO Raveendran has asserted that the company would overcome its “struggles” as it did in past instances as the edtech major approached profitability in the short-term
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Bengaluru: Amid low employee morale, exit of board members and litigation with lenders, Byju’s Founder and CEO, Byju Raveendran on Thursday tried to assuage the nerves of employees in a townhall. Sources in the know said Raveendran has asserted that the company would overcome its “struggles” as it did in past instances as the edtech major approached profitability in the short-term.
Byju’s, which is the most valued startup in India with a valuation of about $22 billion during the last fund raise, is struggling to cope with the funding winter, dip in demand and debt burden.
“The company is now much better in terms of performance compared to a few months back. Byju’s is close to achieving profitability at group level,” said a source quoting Raveendran.
For the first time after the crisis in the company, Raveendran spoke to employees over video in a townhall. In the last one year, Byju’s was in news for wrong reasons as the edtech major fired more than 2,000 staffers in the post pandemic period in its bid to optimise cost. In the townhall, the CEO of Byju’s also took of contentious issues like loan dispute with lenders and resignation of auditor Deloitte and three board members.
“Byju highlighted the strategic decision to appoint BDO as BYJU's statutory auditors for the next five years which led to Deloitte's exit. He said that a mutually agreed-upon decision has been taken to focus on efficient and timely audits going forward,” said another source.
Byju’s is yet to report its financial report for financial year 2021-22, deadline for which ended on September, 2022. Sources in the know said that Deloitte has highlighted its inability to conduct the audit due to a lack of communication over modifications and financials.
Meanwhile, Raveendran asserted that the company would come to an agreement with lenders over the ongoing litigation and soon resolve the issue.
The company is currently going through a debt crisis as it deals with a $1.2 billion loan payment issue. It missed a $40 million repayment due on June 5, and sued its lenders over alleged harassment in the recovery of the loan.
Amid these controversies, the CEO of Byju’s asserted that the TLB dispute is being resolved through constructive discussions and the company is confident that a positive outcome would emerge in next few weeks without court interventions.
At a time when the company is confident is overcoming the present challenges, Raveendran also said that edtech is not a phenomenon arising out of the pandemic and it is going to stay here. Meanwhile, Byju’s major investor Prosus has downgraded its valuation to about $6 billion from the peak of $22 billion, claimed by the company.
Despite such assurances, analysts remain skeptical about Byju’s ability to survive the storm.
“Byju’s is facing many challenges which are the outcome of pandemic-day excesses. Such crisis shouldn’t lead to the Lehman moment of Indian edtech industry,” said a PE fund manager who wished not to be named.
