Byju’s, the largest edtech business in India, has called an annual general meeting (AGM) as it navigates rough waters right now due to a number of issues. This action is crucial for Byju’s, a business that has experienced rapid expansion in recent years. Its once-impressive reputation has been clouded by recent events, such as delays in financial reporting and notable management changes.
Credits: Money Control
Financial Reporting Woes
One of the primary concerns surrounding Byju’s is the delay in releasing its financial results for the fiscal year 2021-22 (FY22). The company, which had previously committed to sharing these results by the end of September, is now facing scrutiny for providing only partial or incomplete financials, even after a delay of almost a year. The AGM scheduled for December 20 is expected to address these financial matters, including the approval of audited FY22 financials.
The delay in financial reporting is not a new issue for Byju’s. In the past, the company had deferred the release of its FY21 results by over 18 months, leading to concerns among investors and stakeholders. Deloitte, the company’s long-standing auditor, had raised red flags regarding revenue recognition methods for FY21 and subsequently resigned, adding another layer of complexity to the situation. Byju’s then brought in BDO as its auditor.
Management Shuffle and Resignations
Changes in management dealt Byju’s stability yet another serious hit. After nearly two years without a permanent Chief Financial Officer (CFO), the company eventually hired Ajay Goel, a former Vedanta executive, in April. But Goel quit after only six months, raising more doubts about Byju’s ability to manage finances.
The corporation faced increasing difficulties in FY23 as important members of the board of directors and top management abruptly quit. Such sudden exits may indicate internal discord and give rise to questions regarding the strategic direction and decision-making procedures of the organization.
AGM Agenda: Seeking Shareholder Approval
The AGM scheduled for December 20 aims to address these challenges head-on. Byju’s has outlined several crucial agenda items for discussion and approval during the meeting. These include:
- Approval of Audited FY22 Financials: Shareholders will have the opportunity to review and approve the audited financial statements for FY22, providing insights into the company’s financial health during a pivotal period.
- Appointment of Statutory Auditors: Byju’s seeks shareholder approval for the appointment of MSKA & ASSOCIATES as the statutory auditors. The choice of auditors holds significance, as they play a crucial role in ensuring financial transparency and accountability.
- Remuneration Approval: The AGM will also deliberate on approving the remuneration of B Y & ASSOCIATES, the cost accountants and cost auditors of the company for FY22, FY23, and FY24. This decision is crucial in shaping the financial governance framework of Byju’s.
Impact on Byju’s and the Edtech Sector
The challenges facing Byju’s have broader implications for both the company and the edtech sector in India. Byju’s, once hailed as India’s most valuable startup with a valuation of $22 billion, has seen its reputation tarnished by delays in financial reporting, management changes, and the departure of key personnel.
The edtech sector, which experienced a boom during the pandemic, was closely watching Byju’s as a key player. The company’s aggressive expansion through the acquisition of at least eight major companies in India and abroad, coupled with securing over $3 billion in equity and debt during FY22, positioned it as a dominant force. However, the recent controversies have raised questions about the sustainability of such growth strategies.
Investor confidence, a crucial factor in the success of any startup, may be at risk. Byju’s concluded FY22 on a positive note with a substantial $800 million funding round, but since then, controversies have unfolded, including media reports of alleged mis-selling and unstructured layoffs.
On December 20, Byju’s AGM is expected to be a pivotal occasion for the business as it works to resolve the issues that have clouded its recent past. The meeting’s outcome will be closely watched by investors, shareholders, and industry watchers who are seeking for accountability, transparency, and a clear path forward for Byju. The choices taken at the AGM will not only determine Byju’s future but also how the larger Indian edtech market is seen, acting as a gauge of how resilient and flexible the sector is when faced with difficulties.