Byju Raveendran's EdTech company, BYJU'S, is currently going through a series of financial complications. The educational company, which was once a unicorn, is now struggling to survive. As per multiple trade experts, Byju Raveendran's company, BYJU'S inability to pay off its debts have raised the possibility of its permanent closure. Amidst all the chaos, Byju Raveendran is announcing a series of major decisions and making promises every now and then to convince his company's shareholders and investors that this too, shall pass.
Forbes Billionaire Index 2024 broke the headlines as it mentioned that Byju Raveendran’s net worth has crashed to zero from the mammoth sum of Rs. 17,545 crores. If we talk about the Billionaire Index from Forbes, it has clearly stated that Byju Raveendran’s ed-tech company, Byju has been enveloped in a series of financial crises for some time now. Courtesy of this, Byju’s valuation has fallen to the mark of just 1 billion USD from 22 billion USD (in 2022). An excerpt from Forbes Billionaire Index 2024 could be read as:
"Only four people from last year's list dropped off this time, including former Edtech star Byju Raveendran, whose firm Byju's was enveloped in multiple crises and its valuation was marked down by BlackRock to $1 billion, a fraction of its peak $22 billion valuation in 2022."
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MSKA & Associates, who is the audit arm of accounting firm BDO Global, has pointed out how losses at BYJU'S have doubled in the last year. As per the auditor, Byju Raveendran's educational company's losses have risen from Rs. 4,546 crore (2021) to Rs. 8,245 crore (2022). Mentioning the low rise in BYJU'S income, the auditor revealed that the EdTech company has only managed to earn Rs. 5,298 crores (2022) compared to Rs. 2,428 crores (2021), which they earned a year before.
According to a Bloomberg report, Byju Raveendran has reportedly approached the existing investors of his company, BYJU'S, to raise a mammoth sum of 100 million USD by mentioning his company's valuation as 1 billion USD (Rs. 8290 crore). It will be interesting to see whether the investors will offer their help in this tough time for the firm, which was once valued at 22 billion USD (Rs. 1,83,000 Crore).
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Amidst all the chaos at BYJU'S, reports are rife that its founder, Byju Raveendran has pledged his family home and an under-construction villa in Bengaluru to pay the salaries of his dedicated employees. As per the reports, the total sum of both houses is around Rs. 100 crores. The entrepreneur plans to serve both the expensive homes for a loan of Rs. 100 crore to settle the salaries of around 15,000 employees.
Undoubtedly, Byju Raveendran is eager to shed some of the pressure from his head by settling his employees' salaries, as many more problematic issues are waiting for his attention. While the struggle of once termed as 'India's EdTech King' is well-documented in media headlines, the significant factors that led to this EdTech's downfall are still unknown to everyone. Thus, we have decided to shed some light on some of the major factors that resulted in BYJU's unexpected fall.
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Whenever a company as big as BYJU'S goes through such a major drop in its sales and stands on the verge of a possible collapse, it's never because of only 3-4 factors. There's a whole list of minor and major decisions that were taken in different departments of the company that led to such a substantial collapse. However, in the case of BYJU'S, the most common error mentioned by a series of trade experts was that the company transformed itself from an EdTech company into a sales machine.
Byju Raveendran's BYJU'S became a success in India because it helped students understand complex topics in a relatively easy way through the use of technology. However, in recent years, the company shifted its entire focus to increasing sales instead of improving the quality of teachers. The introduction of Bollywood superstar, Shah Rukh Khan and legendary footballer, Lionel Messi as BYJU'S brand ambassadors after spending hefty money also turned too heavy on the company's finances.
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Not only this, but the hunger to expand the company during the COVID-19 pandemic was so intense that the EdTech company paid no interest in preparing for the time when schools and colleges will be reopened. From acquiring multiple EdTech startups in India to joining hands with so many educational companies in the US, BYJU'S spent money like water. More money was spent on generating sales instead of improving the treatment of its employees, which resulted in the decline of the quality of their courses. Seeing the quality of BYJU'S courses hitting a new low, several investors reportedly broke ties with the company, which resulted in a financial crunch.
The company needed to prepare better for the challenges they would face once the schools and colleges reopened post-COVID-19. It was when the EdTech company lost its charm in the eyes of many investors, who no longer had faith in the company's future. While on one side, the company was struggling with cash-flow problems, the viral video of a BYJU'S employee lashing out at the accounts department for not clearing her dues and paying salaries damaged the company's image in general public's eye to an unrepairable extent.
In a span of just 15 months, Byju Raveendran's learning app, BYJU'S dropped from an evaluation of 22 billion USD (Rs. 1,83,000 Crore) to 1 billion USD (Rs. 8290 crore). The EdTech firm is currently handling three major cases that include the cricket board, BCCI, the ED (Enforcement Directorate), and a debt of 1.2 billion USD. Regarding the BCCI case, the cricket board accused the educational company of default payments of around Rs. 158 crore.
The second case involves the ED, and as per the reports, the Enforcement Directorate sent a legal notice to BYJU'S back in November 2023. In the legal notice, the ED stated that Byju Raveendran's company had violated India's foreign exchange rules. The third and final case is from overseas, as BYJU'S owes approximately 1.2 billion USD to a series of foreign lenders. The lenders have sued the company after their interest was not paid. It will be interesting to see how the company's founder, Byju Raveendran will tackle this situation.
What are your thoughts on the fall of Byju Raveendra's BYJU'S? Let us know.
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