More trouble for Byju’s as key board members, auditor Deloitte resign

Early backer GV Ravishankar, managing director at Peak XV Partners (formerly Sequoia Capital India), Russell Dreisenstock of Prosus (previously Naspers) and Chan Zuckerberg’s Vivian Wu, are understood to have resigned from the company’s board, further intensifying the downward spiral facing the once-most-valued privately Indian startup.

Their resignations are yet to be accepted by the company, people in know of the matter told ET.

To add to Byju’s troubles, Deloitte, too, submitted its resignation as the company’s statutory auditors on Thursday.

Citing a delay by Bjyu’s in submitting its accounts, Deloitte said the statements were due to be laid before the shareholders in the Annual General Meeting by September 30, 2022.

The auditors have also “not received any communication on the resolution of the audit report modifications in respect of the year ended March 31, 2021, the 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 as on date,” Deloitte said in a letter dated June 22.

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This would have a “significant impact on our ability to plan, design, perform and complete the audit in accordance with the applicable auditing standards,” it added. ET has seen the letter.These developments come at a time when the Bengaluru-based edtech is engulfed by court cases, loan defaults, and a much-delayed filing of its financial results for the year ending March 31, 2022.

ETtech

“All the three investors have collectively decided to resign…There are ongoing discussions between the company and the shareholders but the move signals the growing rift between shareholders and the company,” said another person in the know of the matter. Sources close to the matter said the decision by the investor group was taken as the company’s handling of the dispute with lenders was not appropriate.

A spokesperson for Byju’s said media reports suggesting that three board members had resigned from Byju’s are entirely speculative. “Byju’s firmly denies these claims. Any significant developments or changes within our organisation are shared through official channels and announcements.” the statement added.

Last year, Prosus had said it lost ‘significant influence’ over Byju’s as its stake was diluted to just below 10% in the firm. As of November 2022, it held about 9.67% stake in the edtech firm which is facing multiple challenges including finalising new terms for its $1.2 billion term loan B.

When contacted by ETtech, spokespersons for Peak XV Partners, Prosus and Chan Zuckerberg Initiative, did not immediately respond

Also read | Byju’s and the debt trap haunting Indian tech startups

Byju’s versus lenders

Byju’s is presently negotiating with its lenders for its $1.2 billion term loan B, even as both sides have filed suits against each other. The company continues to hold one-on-one conversations with creditors to finalise new terms for the loan, ET reported earlier.

While lenders like Glas Trust Company are pursuing legal action against the edtech firm in Delaware, US, Byju’s has filed a suit against hedge fund Redwood and its entities in New York, against their demand for “accelerated repayment”.

Led by founder and CEO Byju Raveendran, Byju’s has since the past year been shedding thousands of jobs to cut costs amid slowdown in funding and growth stalling in the online education sector post the pandemic bump-up. Earlier this week, the General Atlantic-backed firm undertook a fresh round of job cuts that would impact up to 1,000 jobs, ET had reported. These layoffs are expected to be across departments in Byju’s as well as its coding subsidiary– Whitehat Jr.