As Byju’s is unravelling, anyone associated with the company — its investors, its customers, and even its partners — are all stepping up the heat.
BCCI has said that Byju’s owes it Rs. 158 crore from its truncated Team India sponsorship. It has also taken Byju’s to India’s bankruptcy court, the NCLT, over the default. Byju’s had become the chief sponsor of the Indian cricket team in 2019, but had been replaced by Dream11 earlier this year.
“It is stated that the General notice was issued to BYJU’s vide email dated 06.01.2023 and the default amount of Rs.158 crore, excluding TDS as reflected,” the NCLT website said about BCCI’s case. The NCLT has granted a period of two weeks to Byju’s to file reply in the case and another week thereafter to BCCI to file rejoinder.
Byju’s had become the chief sponsor of the Indian national cricket team in 2019, having replaced Chinese phonemaker Oppo. At that point, it had signed a three-year-long contract with the BCCI, and was slated to remain the chief sponsor till 2022. Byju’s, though, had extended its contract for another year till 2023. Around this time, however, Byju’s had found it hard to raise further funds, and had then chosen to withdraw from the sponsorship. BCCI had then replaced Byju’s with fantasy games platform Dream11.
As it turns out, BCCI believes that it’s still owed Rs. 158 crore from the transaction, and has taken Byju’s to bankruptcy code over it. Byju’s has had a crisis-laden last few quarters. It had delayed filing its FY21 financial results for so long that even the Indian government commented on the issue. The results hadn’t made for pretty reading — Byju’s had lost Rs. 4,588 crore in FY 21 — and Byju’s had then proceeded to lay off thousands of employees. Around this time, questions had been raised in Indian parliament about Byjus’ alleged mis-selling of courses to economically vulnerable parents, and even the country’s child rights body had summoned CEO Byju Raveendran for questioning.
But things kept getting worse — not long after, the Enforcement Directorate had raided CEO Byju Raveendran’s home, and seized incriminating documents over violation of foreign exchange laws. Since then, Byju’s has seen its valuation marked down by as much as half by several investors, and the company had tried to restructure its loan obligations. Byju’s had then been sued by its lenders, but it had gone on to sue them back and refused to pay back its loans amounting to $1.2 billion. Not long after, 3 of Byju’s board members had resigned in unison over concerns over its corporate governance, and a day later, its auditor, Deloitte, had also resigned. Just last month, ED has issued the company a show-cause notice for contravening FEMA guidelines to the tune of Rs. 9,000 crore, and its Gurgaon employees had been evicted from a coworking space over non-payment of rent. Byju’s has also delayed its November salaries to employees, and founder Byju Raveendran has pledged his own homes own homes worth Rs. 100 crore to pay them. And to top it all off, one of its biggest investors had slashed the company’s valuation to less than $3 billion, implying an 86 percent fall in its valuation since 2022.
Amidst all this turmoil, Byju’s has been to taken to the court by the BCCI over unpaid dues of Rs. 158 crore. It’s a sad situation for what was once India’s highest-valued startup — it’s being cornered from all sides, and will find it hard to wriggle out of the mess it’s found itself in. And the team India sponsorship is perhaps emblematic of its troubles — while it was still making crores of losses, Byju’s tried to grow even faster through sponsorships of the Indian cricket team and tie-ups with football star Lionel Messi. And when the ed-tech tide has turned, it’s finding it hard to pay off its excesses of the post-Covid funding boom.