Byju's faces more trouble as its auditor & 3 directors quit

NEW DELHI: Once a celebrated startup, Byju's is sinking deep into trouble. Amid its ongoing tussle with lenders, its auditor, Deloitte, on Thursday said it has resigned. Separately, three nominees of investors have also stepped down as directors from the board of the company, which not so long ago was India's most valuable unicorn.

In a letter addressed to the board, Deloitte cited lack of communication on the status of "audit readiness" of its 2021-22 results. "...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 on date....there will be significant impact on our ability to perform and complete the audit in accordance with the applicable auditing standards," the audit major said.

Byju's did not comment on Deloitte's resignation. In a statement, the company said it has appointed BDO (MSKA & Associates) as its statutory auditors for five years, starting April 2021. Byju's had filed its FY21 results after a delay of 18 months and reported losses of over Rs 4,500 crore, a 17-fold jump from the Rs 262 crore in the previous financial year.

The development comes shortly after it was gathered that three key members of the board of Byju's also tendered their resignations. Sources in the know said G V Ravishankar, managing director at Peak XV Partners (formerly Sequoia India and SEA), Russell Andrew Dreisenstock of ProsusGroup and Chan Zuckerberg's Vivian Wu have resigned. While Byju's termed the news as "entirely speculative", the company is said to have accepted the resignations.

Valued at $22 billion at its peak, Byju's of late has seen a series of valuation markdowns by its investors such as BlackRock. It has raised about $5 billion from investors and counts high profile firms like Tiger Global and General Atlantic among its backers.

"Somehow, Byju's seem to have gotten carried away by the massive adoption of edtech solutions during the pandemic, shifting their focus to numbers rather than customer experience and needs," said Atit Danak, partner and head CoNXT at management consulting firm Zinnov.

Earlier this week, Byju's fired some 500-1,000 full-time employees in a fresh round of layoffs, amid its struggles with lenders, which have moved to the court room. Earlier this month, Byju's skipped paying a $40 million quarterly interest payment on its $1.2 billion term loan B and instead moved the New York Supreme Court, challenging acceleration of the loan and seeking to disqualify lender Redwood, which the firm claimed engaged in predatory tactics. The lenders hit back, terming the lawsuit as meritless and reportedly dismissed requests of one-on-one discussions put forth by the startup.