India’s most valuable edtech giant Byju’s has hit another roadblock, which might not be surprising if one goes by reports highlighting layoffs, lender concerns, change of auditors, and more at the startup.
The company might lose out on its biggest Indian endorsement in the form of actor Shah Rukh Khan as recent news reports suggest that the Bollywood superstar might not renew the deal with the edtech giant. The decision would be a massive blow to the company, which signed the deal with SRK back in 2017.
Khan moving away from Byju's signals PR crisis for company
Khan pulling out of the endorsement deal would be significant in light of the edtech company’s woes with worsening public image.
Though Byju’s saw layoffs when it fired 5% of its workforce, totalling around 2,500 employees in October 2022, it saw history repeat itself in February 2023 when the company laid off some 1000 individuals from senior roles.
No end in sight for layoffs at Byju's
But the June 2023 layoffs, which primarily focused on workers in the sales and finance departments of Byju’s, are part of the company’s long-term cost-cutting and profitability plans as per sources.
“I was laid off with many other employees and we came to know that the action was related to cost-cutting and profitability plans at Byju’s. I was told that my performance is not meeting the desired target,” stated a former employee in Mumbai who was working with the Business development team.
“I can’t get into the tactics but aggressive sales strategy was an immense issue as we were under constant pressure,” added the Mumbai-based individual.
Raveendran confident of profitability for Byju's amid crisis
Though Byju Raveendran, the co-founder and CEO of Byju’s, did not meet the employees in person he addressed a virtual town hall on June 29, wherein he highlighted that the company is close to achieving profitability.
According to sources, Raveendran said during the town hall that Byju’s is close to achieving profitability at the group level, demonstrating the company's commitment to financial management and optimization of operations.
“He said that BYJU’S is now growing slowly but sustainably and most of its business verticals are in good shape, relatively speaking,” the source added.
Byju's Sales workforce disheartened over lack of incentives
But many of the company’s employees, especially in Sales, are finding no motivation in working at Byju’s owing to lack of incentives.
“They have held incentives for the last 10 months and are not even planning to disburse, I believe. Being in sales if you're not getting incentives it is sad as it leads to no motivation in work,” said an employee working with the Sales team. He further added that many of the senior individuals in Byju’s sales team were let go as they were not able to justify their salaries.
From layoffs, auditor change, lender row, Raveendran gets real
According to sources, Raveendran expressed his emotions surrounding the layoffs by stating that his heart went out to every team member who had to face the impact of downsizing, a decision they had to take as a ‘last resort.’
But Byju’s troubles were not limited to layoffs, as the company also saw its auditor Deloitte Haskins & Sells, which was slated to audit the company til 2025, step down with ‘immediate effect’ due to ‘long delayed’ financial statements by the edtech giant as per reports.
The company wasted no time in announcing the appointment of BDO (MSKA & Associates), as its statutory auditors for the year commencing from FY22 for the next five years, on June 22.
“We have chosen BDO as our auditors with great confidence following a well-structured selection process. Their exceptional capabilities and expertise in providing audit services to globally diversified large-scale companies make them the perfect fit for our organisation. We are excited to collaborate with BDO to uphold the highest standards of financial scrutiny and accountability," said Ajay Goel, Chief Financial Officer, Byju’s in an official statement.
With its case in New York Supreme Court against one of its lenders Redwood over the purchase of a significant portion of the loan while primarily trading in distressed debt, Raveendran shared during the townhall that the US$ 1.2 billion Term Loan B (TLB) dispute is being resolved through constructive discussions and that he is confident about achieving a positive outcome in the next few weeks without court intervention.
Resignations by the company’s board members have left Raveendran, his wife Divya Gokulnath, and brother Riju Raveendran as the only ones at the helm of decision-making. The three promoters together have also sold shares worth $408.53 million in 40 secondary transactions since 2015, as per market intelligence platform PrivateCircle Research.
“Raveendran said that the departures of three board members are unrelated to Deloitte's resignation and stated that their exit was amicable and carried out with mutual understanding,” said a person familiar with the matter.
Byju’s did not respond to the questions sent in by The Free Press Journal.
