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Deepening the crisis in education tech startup Byju’s, Deloitte Haskins & Sells, auditors of the company, resigned, citing its inability to finalise audit reports for the financial years ended March 2021 and March 2022 amid escalating concerns on the financial front.
According to the auditor, the financial statements of the company for the year ended March 31, 2022 are long delayed. In accordance with the Companies Act, 2013, the audited financial statements for the year ended March 31, 2022 were due to be laid before shareholders in the annual general meeting by September 30, 2022.
“We have also not received any communication on the resolution of the audit report modifications in respect of the year ended March 31, 2021, status of audit readiness of the financial statements and the underlying books and records for the year ended March 31, 2022 and we have not been able to commence the audit as on date,” Deloitte said. “As a result, there will be a significant impact on our ability to plan, design, perform and complete the audit in accordance with the applicable auditing standards.”
“In view of the aforesaid, we are tendering our resignation as statutory auditors of the company with immediate effect,” the auditor said. Deloitte was appointed for a five-year tenure till March 2025.
Following the exit of Deloitte, Byju’s appointed BDO (MSKA & Associates) as its statutory auditors for the year commencing from FY22 for the next five years. Under this appointment, BDO will cover the holding company, Think and Learn Pvt Ltd, its material subsidiaries such as Aakash Education Services Limited as well as the overall group consolidated results. This comprehensive audit coverage will provide a holistic view of Byju’s financial performance and ensure transparency across the organisation, Byju’s said.
Meanwhile, there were speculations in the market that three of Byju’s directors have resigned. They include G V Ravishankar of Sequoia Capital, Vivian Wu of Chan Zuckerberg Initiative, Russell Dreisenstock of Prosus.
However, a spokesperson of Byju’s denied the resignations. “A recent media report suggesting the resignations of board members from Byju’s is entirely speculative. Byju’s firmly denies these claims and urges media publications to refrain from spreading unverified information or engaging in baseless speculation. Any significant developments or changes within our organisation are shared through official channels and announcements. We request media outlets to rely on verified sources and official statements for accurate information regarding Byju’s,” the spokesperson said.
Byju’s reported a loss of Rs 4,564 crore in FY21. The financial statement showed the net loss saw an increase as promotion and employee expenses rose. Revenues fell 3.3% to Rs 2,428 crore as it deferred about 40% of its revenue to subsequent years due to its new revenue recognition model.
The company was earlier in breach of the covenants of the $1.2 billion loan it took in November 2022. It reportedly failed to provide its financial statements to the lenders according to the stipulated deadline as part of the loan covenant. Following this, a group of lenders who participated in the term loan pushed for faster repayment of part of the loan.
Byju’s valuation has been falling over the years. US investment firm BlackRock recently slashed the valuation of Byju’s by 62 per cent. It fixed the value of the company’s shares at $4,043,471, thereby estimating Byju’s fair value at $8.4 billion as of March2023. Byju’s valuation was $ 24 billion at its peak.
The company also laid off around 2,500 employees in October last year. Layoffs are continuing even now with employees asked to quit across various departments.
