Byju's, once a leading edtech company valued at USD 22 billion, faces a significant crisis due to financial mismanagement, legal issues, and investor backlash. Let's explore its journey.
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Byju Raveendran began with a coaching center in 2007 for CAT aspirants. In 2015, he launched the Byju's app, which gained prominence, eventually making Byju's a global edtech leader.
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By 2022, Byju's claimed over 150 million registered learners globally and planned to double its tuition centers from 250 to 500, with a valuation of USD 22 billion. Shah Rukh Khan was its brand ambassador.
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The downfall of Byju's began with the delayed release of FY2022 results, followed by massive layoffs and loan defaults. Deloitte Haskins & Sells resigned as auditors, citing reporting issues.
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Byju's parent company, Think & Learn Pvt Ltd, faces urgent need of funds, financial losses, legal suits, and investor backlash. Valuation dropped below USD 1 billion, and investors push for leadership changes.
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The US bankruptcy court imposed penalties on Riju Ravindran for contempt of court. NCLT and US courts are handling cases over repayment of USD 1.2 billion loan taken by Byju's subsidiary, Byju's Alpha.
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Between 2017 and 2021, Byju's made several acquisitions that failed to generate expected cash flow. Aggressive advertising and corporate governance issues contributed to the downfall.
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Experts suggest Byju's avoid excessive spending on campaigns and acquisitions. Maintaining healthy investor relationships and a periodic reporting structure is crucial for business stability.
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Byju's aims to secure operational capital through a USD 200 million rights issue. Experts recommend allowing the rights issue to proceed for the company's survival and the stability of the education ecosystem.