Is Byju's bankrupt?

The woes for Byju's seem unending. 

Prosus, a tech investor, slashed the edtech startup's valuation to below $3 billion, a staggering 86% drop from its peak valuation of $22 billion just last year.

Adding to the turmoil, the Board of Control for Cricket in India (BCCI) dragged Byju's to the National Company Law Tribunal (NCLT), intensifying the scrutiny on the company's state of affairs.

Once the shining star of India's thriving startup scene, Byju's is now grappling to recover from a post-COVID slump that originated back in 2019.

It all started in 2017 when Chinese smartphone giant Oppo, midway through its five-year, ₹1,079 crore deal with BCCI, decided to back out, seeking to curtail losses as the sponsorship failed to yield the desired returns.

Amidst this, Byju’s stepped in, placing its logo on the Indian Cricket team's jersey.  In 2020, Byju’s was having its moment as the COVID-induced closure of educational institutions and students started moving to online institutes. Its valuation soared from $5.75 billion in July 2019 to a whopping $13 billion by March 2021. 

Byju's was on an expansion spree and even secured sponsorship for the FIFA World Cup 2022.
Flushed with funding, Byju's extended its contract with BCCI until November 2023, offering a 10% premium on the fees. 

But the post-pandemic era brought harsh realities – funding dried up, investors became more cautious, leading Byju's to undertake severe cost-cutting measures. 

The company has already laid off over 5,000 employees since 2022, with another 4,000 expected to face a similar fate.

BYJU’S faced a tough time due to its acquisitions, which caused massive losses. In FY21, its losses surged to INR 4,588 Cr, a whopping 20 times higher, while revenue stagnated at INR 2,280 Cr.

The never ending troubles 

The trouble didn't stop there. Delayed financial statements caused a stir among investors, leading to Deloitte, the auditor, and three key board members leaving. Despite sharing parts of FY22 results, the official audited financial statements remained missing.

To calm the waters, BYJU’S decided to pull out of its BCCI sponsorship in December 2022, quickly replaced by Dream 11. However, the move triggered a legal showdown as BCCI claimed unpaid dues worth Rs.160 crores, escalating the dispute to the NCLT.

Now, while NCLT is a bankruptcy court, it doesn’t necessarily mean BYJU’S is bankrupt. But if it smells financial trouble, it could take control. Given the reports of payment struggles and capital issues, BYJU’S might hustle to settle its dues fast to dodge NCLT's intervention.

Things don’t end here for Byju’s, the company has also came under the radar of ED. The Enforcement Directorate (ED) announced issuing show cause notices to Byju’s parent company, Think & Learn, along with its CEO Byju Raveendran. The notices pertain to suspected breaches of the Foreign Exchange Management Act (FEMA) and involve an amount totaling Rs 9,362.35 crore.

With a potential debt crisis, delayed payments, and regulatory heat, BYJU’S navigates the BCCI dispute. Yet, the road ahead is uncertain amidst financial challenges, regulatory pressures, and significant leadership changes. The complexities surrounding the $1.2 Bn Term Loan B (TLB) and unresolved transactions make for a daunting scenario in BYJU’S current business landscape.