Indian education technology giant Byju’s, which lost its auditor after delaying financial statements, has told investors it will file 2022 audited earnings by September and 2023 results by December, a person with direct knowledge of the matter said.
Deloitte said on Thursday it was severing ties with Byju’s, one of India’s most successful start-ups, over its “long-delayed” financial statements for the year ended March 2022.
Board members representing Peak XV Partners, earlier known as Sequoia Capital India, Prosus and Chan Zuckerberg Initiative also stepped down, without publicly expressing their reasons.
The resignations are among the biggest crises for Byju’s, valued last year at $22 billion and backed by the likes of investor General Atlantic. The episode raises questions about the edtech firm’s corporate governance and comes weeks after it was raided over suspected violations of foreign exchange laws.
Byju’s leadership, including founder Byju Raveendran and chief financial officer Ajay Goel, briefed about 75 shareholders on Saturday to address their concerns about the company’s financial affairs, said the source, who attended the meeting.
Goel told the investors Byju’s will submit 2021-22 audited results to regulators by September and 2022-23 earnings by year’s end, the source said.
Byju’s, which became popular in offering online and offline tutorials, declined to comment on Sunday. It has not commented on why its results have been delayed.
Deloitte, cutting short a term as an auditor that was to end in 2025, said in its resignation there was a “significant impact” on its ability to audit the firm as it did not receive financial records from Byju’s despite several reminders. Byju’s has appointed BDO as its new auditor.
Byju’s has asked three board members to reconsider their resignations, Reuters reported on Friday. They decided collectively to quit after raising concerns in recent months with leadership about the audit delays and how Byju’s dealt with issues relating to its lenders, sources have said. The company told investors it was focussing on appointing new independent directors to the board, said the source.
Of the investors who resigned from Byju’s board, Peak XV said it would support the company “to strengthen business processes and internal control mechanisms”.
Staff morale low
The fresh troubles have escalated concerns among employees who were already uncertain about their future after several rounds of job cuts, more than a dozen current and former staff told Reuters.
Byju’s has already let go of several thousand employees this year due to slowing demand and it is locked in a legal battle with its lenders and faces regulatory scrutiny, even as its valuation has been slashed by at least one marquee investor.
“Morale is at an all-time low. Literally, every person has a job portal open on their laptop at all times. Everyone wants to leave desperately before they are asked to pack up overnight,” said a senior manager at Byju’s, requesting anonymity. “Right now the situation is so dismal, subordinates are sitting with their managers and job hunting.”
Several employees, all of whom requested anonymity, said they had received no memos about the exits of auditor Deloitte and the board members.
A Byju’s spokesperson did not respond to Reuters queries on staff morale, the lack of communication from management or other issues raised by employees.
“It’s all been eerily quiet so far,” said the manager, adding that the lack of communication from the leadership was heightening concerns.
