Byju introspects, says Byju's worth zero now, promises a turnaround

Last month, the Supreme Court reserved its verdict on a plea of a US firm against NCLAT order stopping insolvency proceedings against Byju's

The worth of once most valued Indian startup is zero now, Byju Raveendran, the founder of beleaguered education technology startup Byju’s, said on Thursday as he called for rebuilding the erstwhile empire from the scratch, brick by brick.

Valued at $22 billion in 2022, Byju’s has seen its fortunes dwindle due to massive cash crunch, regulatory issues and disputes with investors, including battle with US lenders who are demanding $1 billion in unpaid dues, triggering the firm’s insolvency.

Last month, the Supreme Court reserved its verdict on a plea of a US firm against the National Company Law Appellate Tribunal (NCLAT) order stopping insolvency proceedings against Byju’s. The apex court asked the insolvency resolution professional (IRP) to maintain status quo till it delivers its judgement in the matter.

“I only need to see a 1 per cent chance to make it work. I am not worried about what order would come. Whatever would be the outcome, I would find a way out. There is no problem in this world which cannot be solved,” Raveendran told reporters on Thursday from his residence in Dubai.

“You might be thinking I am on the edge. But I have been on the edge so many times in life. I am not saying that I would make a comeback in two months or set up a $20 billion company again, but it means that I would continue my mission. Nobody can take that away from me. If I start a teaching session, I can fill up a stadium,” he said.

He said that the value of parent entity Think & Learn is now down to zero.

However, the 26 subsidiaries of Byju’s including Aakash Education Services and Great Learning cumulatively report Rs 5500 crore in ARR, he said.

“Investors didn’t care about students or parents, they just wanted me to create a $100 billion company,” he said. “I was sitting on Rs 7500 crore and now that has reached to zero.”

Byju’s investors have argued in a court that the company has siphoned off $533 million and sought a stay on the firm’s rights issue. Byju’s and its investors also locked horns at the National Company Law Tribunal (NCLT) this year over the company’s rights issue of $200 million in a petition alleging oppression and mismanagement.

The group of four investors -- Prosus, General Atlantic, Sofina, and Peak XV (formerly Sequoia) -- had sought a stay on the rights issue at less than 99 per cent enterprise valuation compared to Byju's peak valuation of $22 billion. They had the support of other shareholders, including Tiger Global and Owl Ventures.

“We have not made any intentional mistakes. We have never siphoned-off money. There is no fraud. If there is a big fraud, why would I put all my family money back into the company,” asked Raveendran.

“If you think we are completely doomed and people may burn Think & Learn (Byju’s parent) down, it won’t be easy. Because we won't give up,” he said.

Meteoric rise and tragic fall

The pandemic played a key role in the growth of Byju’s and other edtech companies. It helped Byju’s to become a decacorn in 2020. This means it crossed a $10.5 billion valuation. Raveendran had been on an acquisition spree leveraging the capital it raised from investors.

The slide started in 2022, including sacking employees, alleged harsh and "abusive" work culture, inability to file its financials and challenges in raising fresh capital amid a funding winter and macroeconomic uncertainty.

“We did make a mistake of overestimating the growth in the initial phase of Covid. But that is part of the game for growth. Most of the acquisitions were brought in by investors, and we got carried away,” said Raveendran. 

Raveendran also shared the blame on the investors for the company's meltdown. He said though the investors provided support during good times, when the case in the Delaware court was filed which centred around a $1.5 billion Term Loan B guaranteed by Think & Learn, the parent company of Byju’s, the investors resigned.

“None of them are entrepreneurs who have high risk tolerance and are not scared of liabilities,” said Raveendran. “When we raised the $1.5  billionTLB loan, every investor was boasting it as a big achievement.”

 He said the most encouragement for an acquisition he got from investors was for Whitehat Jr. The most resistance he  got from the board was for Aakash acquisition. Later Aakash became the best-performing acquisition of the edtech firm. Whitehat Jr contributed to major losses at the firm.

When asked about whether resisting the proposal of management change was a mistake after the resignation of the auditors and the investors, Raveendran said, “The company wouldn’t have survived so long, without the support of the founders. Over the past 29 months, TLPL's (Think & Learn Pvt Ltd, Byju’s parent) only source of capital was the founders. The founders together have infused approximately Rs 7,500 crore in the company for various operational needs.”

“They (investors) were actually asking for that without any plan. Ever since the market has turned in 2021, the only source of the capital for the company has been the founders. Those (investors) who have already made money, do you think they would have saved the company,” asked Raveendran.

“Every month we have been personally paying salaries. We only settled the case with the BCCI. During crisis times, these guys ran away from the board.”

Raveendran lamented that if the company had appointed investors including former Infosys director TV Mohandas Pai, who had helped build large companies as board members at an early stage, the scenario would have been different for Byju’s.

 

Didn’t flee the country

Earlier this year, the Enforcement Directorate (ED) had requested the Bureau of Immigration (BOI) to issue a revised look-out circular (LOC) against Raveendran related to alleged violations of the Foreign Exchange Management Act (FEMA).

There have been media reports that Raveendran has fled to Dubai. But Raveendran said that he has come to India 10 times in the last 12 months. He would be back in India after his court trials.

Raveendran said he moved to Dubai for his father’s treatment. Regarding his personal life, he said after two boys, he was now a father to a four-month old baby girl. 

Resignation of auditors

Recently Byju's auditor BDO Global resigned citing a lack of transparency from the company’s management. BDO was appointed auditor earlier this year after Byju's former auditor, Deloitte, left the firm, citing several issues with the company's financial reporting. Following the Deloitte’s resignation, the firm’s top three investors — Prosus, Peak XV Partners, and Chang Zuckerberg Initiative — representatives also resigned. 

Raveendran put these allegations aside and said it was a collective and conscious decision of the company to not grant access to Deloitte as they were unable to complete the audit in given timelines. He also said that BDO resigned after the company went into bankruptcy. “There is no fraud in any of the audit reports of Deloitte,” said Raveendran.