Byju’s FY21 loss increased 17 times, and the company’s technique for calculating sales changed.
A far cry from its expectations, edtech giant Byju’s reported revenue of Rs 2,428 crore for the fiscal year that ended in March 2021. As the start-up filed its financials for FY21 after an 18-month wait that also drew government scrutiny, its losses increased 17 times to almost Rs 4,500 crore.
It generated revenue of Rs 2,428 crore in FY21, about 14% less than the Rs 2,704 crore it reported in FY20. In contrast to the loss of Rs 260 crore it experienced in FY20, it reported a loss of Rs 4,588 crore in 2022-1. The start-up stated in various media interviews that it anticipated generating $1 billion (Rs 8,000 crore) in revenue in FY21 in the run-up to its financial disclosures.
Byju’s financial disclosures follow what seems to be a delay in the auditor, Deloitte’s, approval of the results, which had sparked compliance-related concerns within the start-up. Byju’s revenue recognition practices had raised several red flags for Deloitte, which caused a delay in submitting the findings to the Ministry of Corporate Affairs (MCA).
The start-up, which has its headquarters in Bengaluru, attributed the decline in sales to a change in how its income was calculated. Although there was “significant business growth” in comparison to FY20, “over 40% of the revenue was deferred to following years” since “this is the first year where new revenue recognition occurred due to a Covid related business model transformation,” according to the statement. Byju’s auditors claim that the “rationalized growth” between FY 21 and FY 20 was brought on by changes made to how the business recognizes its profits.
According to reports, Byju’s postponed paying $1 billion to private equity firm Blackstone for the acquisition of Aakash Educational Services. It is known that Byju’s will complete its payment to Blackstone, which has a 38% share in Aakash, before the end of the month.
The MCA requested a response from Byju in the final week of August due to the delay in filing yearly financial accounts. Private businesses must submit their annual financial statements by September 30 of the next fiscal year following MCA regulations. However, Byju missed the formal deadline for the FY21 results by approximately a year. In reality, it still has a little over two weeks to submit its annual financial reports for FY22.
In a statement, Byju’s asserted that their gross revenue for FY22 reached Rs 10,000 crore. However, these results are not audited. It said in its audit report for FY21 that its auditors had given an unqualified report, which essentially means that the auditor found no discrepancies in the financial records for the fiscal year.
As COVID restrictions have loosened nationwide since the start of 2022, schools and other educational facilities have become more accessible, which has lessened the demand for online education services. That, together with the financial shortage brought on by geopolitical unrest sparked by Russia’s invasion of Ukraine and rising prices, has made it difficult for start-up businesses to obtain money, with edtech companies bearing the brunt of it. Insolvency and bankruptcy procedures for Lido Learning were started last Monday, six months after the company had to halt operations due to a cash shortage. Uday and Crejo, two edtech startups, came before that. Fun closed down earlier this year as well, forcing 270 employees to go.
More than 12,000 individuals have been let go by startups in the nation as a whole thus far, with the edtech and e-commerce industries being particularly hard hit. 2,500 employees from Byju’s many businesses, including those from its sales team and WhiteHat Jr. and Toppr, two start-ups it had purchased in multi-million dollar agreements in the previous two years, are reportedly being let off. Unacademy, its primary competitor, claims to have fired 600 people, mostly from its exam preparation division, while those who were directly affected estimate that figure to be closer to 1,000.
Byju is moving closer to an upsetting, protracted ending.
A company’s primary goal is to make money, and to achieve this it uses a variety of market instruments, including mergers, acquisitions, and amalgamations. Profits rely on the growth of the consumer and capital bases. The monopolization of the market is another method for achieving this expansion.
However, the market’s democratization and the surrounding rivalry have produced a thriving business climate, leaving little room for monopolization. Companies are thus seeking to grow through acquisitions to build their monopoly, but this ambition for market dominance is costing them dearly.
Every firm must undertake an audit of its financial statements following the Companies Act 2013 and report the results to the Ministry of Corporate Affairs (MCA) within one year of the fiscal year’s end. The filing shall not be postponed for longer than seven months, in addition to one year.
But BYJU’s firm has now turned in the required financial statements and yearly reports for the fiscal years 2020–21 after 18 months of delays. BYJU’s reported that for the fiscal years 2020–2021, the company had revenues of Rs 2,428 crore and losses of Rs 4,588 crore. The loss is allegedly fifteen times more than for 2019–20. The education technology business has lost Rs 300 crore as of 2019–20.
Byju Raveendran and Divya Gokulnath established the global company BYJU in 2011 to create educational technology. Over 115 million students are registered, and the company is presently valued at USD 22 billion. As it entered the digital era, BYJU’s development trajectory was largely biased toward the online education model. The company quickly expanded its global presence, coinciding with the digital revolution in India.
The method of instructing students using 10–20 minutes of digital animation movies significantly enhanced their understanding. To “inspire students all around the world to fall in love with learning,” the firm is now concentrating on creating BYJU’s Future School. The corporation had a tremendous financial base as a result of its success in such a short period, and it was valued at about $22 billion. A significant influx of cash has also given the business the ability to maneuver for acquisitions.
If we examine the list above, it can be concluded that following the pandemic, buyouts became much more common. Additionally, the company’s loss of Rs. 4,588 crores is from the same year that they bought these fledgling start-ups. The whole lockdown and online education initiative would have given business strategists the notion that the educational sector may entirely transition to a virtual environment. Numerous more Indian firms have also made this prediction public. However, the easing of the pandemic wave and the relaxation of lockdown restrictions allowed firms to resume operations offline.
As a result, buyout investment dried up, and the move of the business to offline mode reduced the sources of income. Businesses no longer anticipated converting the entire educational system to a virtual one. The prior large buyouts began to put the corporation under financial strain. The firm has now revealed the huge loss that was suggested by the delayed financial statement filing, the following takeover, and other adverse stories.
As a result, buyout investment dried up, and the move of the business to offline mode reduced the sources of income. Businesses no longer anticipated converting the entire educational system to a virtual one. The prior large buyouts began to put the corporation under financial strain. The firm has now revealed the huge loss that was suggested by the delayed financial statement filing, the following takeover, and other adverse stories.
Due dates for payments are being postponed and employees are being let go, which indicates that the company’s massive expansion strategy is failing. To establish its monopoly, the company expanded its activities and took on a large financial load. As the company manages a winter of financial inflows, it looks to be seriously in danger.
The distinction between ambition and avarice is quite fine. The sky is the limit when it comes to the heights of corporate success that may be achieved with a strong passion and commitment. However, the desire to rule the market might make you drown in the trenches. That appears to be what happened with BYJU, a worldwide educational technology corporation based in India.
To become the biggest EduTech company on the planet, BYJU bought hundreds of enterprises both during and after the COVID era. We are currently suffering losses in our business and finances. The situation has become so bad that BYJU is currently having trouble carrying out its financial commitments. To increase sales, it is misleading poor Indians.
According to reports, BYJU’s corporate management has turned to fraud to market its online educational offerings. They first go after middle-class and lower-class parents who will do everything to improve their children’s circumstances. Salespeople for the firm entice parents by promising a bright future for their kids and getting them ready for the loan application procedure. Poor and uneducated parents agree to take out loans without understanding how EMIs and interest work.
The harm is already done by the time they understand the purchase’s ongoing costs. They block the parent’s phone number and go to the next victim. Many underprivileged families have been devastated by this internet Ponzi scam. They become embroiled in an expensive BYJU course out of love for their kids.
How did BYJU’s firm come to be in such an obvious predicament when it was once the leader among Indian start-ups? The corporation was successfully ascending to new heights before the epidemic. However, the desire to control the global EduTech sector through a monopoly led to tragedy. Although they bought the firm in their haste to rule, they now lack the funds to pay for these expensive buyouts.
Due to a decline in start-up funding, businesses are working immensely to rein in their initial, extravagant expenditure. The small subscriber base made the financial situation far worse, much like how BYJU’s initial spending had already dried up its earnings. To enhance their market share, they began robbing the poor and using dishonest business practices. They are already morally bankrupt, even though they haven’t yet filed for bankruptcy.
Similar remarks were recently expressed by Gaurav Munjal, co-founder of Unacademy. He asserted that the company has to focus on profitability because the financial winter has arrived. For BYJU’s business, which was maintaining and expanding due to a huge spring of cash, winter has arrived.
The strength of the corporation is now beginning to reflect the move in commerce to an offline mode. According to Byju Raveendran, founder and CEO of BYJU, their gross revenues hit Rs 10,000 crore in the fiscal year 2021–2022. But their annual financial statement for 2020–21 reflects the resulting unethical and selfish corporate mindset. This just results in a lengthy and agonizing death if he does not change his mindset.
