According to two informed sources, the board has accepted the findings but the financials have not yet been disclosed to all investors. They stated that it will subsequently be submitted to the Registrar of Companies.
According to various people briefed on the situation, Byju Raveendran, the co-founder and CEO of ed-tech unicorn Byju’s, has informed shareholders and board members about the discrepancy between its expected revenue and audited data. According to insiders with knowledge of the situation, the differences resulted from a change in how the business recognizes its sales. They said that the lower revenue figure would shortly appear in its annual report.
Sequoia Capital, General Atlantic, T Rowe Price, and Blackrock are among the investors being discussed with. The talks with investors occur as Byju’s has postponed disclosing its financial results for the fiscal year ending March 31, 2021. (FY21). With a $22 billion valuation, the Bengaluru-based ed-tech company is India’s most valuable startup, and its 18-month filing delay has drawn more attention.
The corporation has also been questioned by the Ministry of Corporate Affairs, which has asked it to give an explanation for the delay.
According to a person with knowledge of the situation, “Raveendran has been talking to all investors and explaining to them about the large disparity in original numbers and what the firm will provide now.” The source continued, “He is selling it as an accounting policy change that the auditor has mandated.”
Byju’s did not react to ET’s email until the close of business on Monday.
According to three sources with direct knowledge, the online tutoring company would likely hold its annual general meeting (AGM) during the next few days and publish its audited financials for FY21 to all interested parties.
According to two informed sources, the board has accepted the findings but the financials have not yet been disclosed to all investors. They stated that it will subsequently be submitted to the Registrar of Companies.
Recognizing revenue
The company’s designated accountant is Deloitte. Byju’s revenue recognition procedures are under scrutiny because the accounting firm has not yet approved the company’s financial statements. The term “revenue recognition” in accounting describes the precise circumstances in which revenue is recognized. In order for their revenue to be accepted in accordance with Indian Accounting Standard (Ind-AS) 115 norms, they (Byju’s) had to shift some of it. One industry official recently told ET that the revenue anticipated for a multi-year charge in one fiscal year cannot be considered as the sole measure of income for that year. Byju’s, which offers consumers tablets (hardware products) as part of its subscription service, has been detected for declaring sales as revenue for a specific year.
Another individual familiar with the conversations predicted that the corporation will blame the difference in revenue to “business model changes as a result of Covid-19.” According to Bloomberg data, the uncertainty has caused the bond prices for its $1.2 billion term loan B (TLB) to drop by about 32% to 66 cents on the dollar as of Monday.
The Financial Times published an article that emphasized the sell-off, which began in April but had accelerated since last week.
As previously reported by ET, the edtech company informed debt investors that on September 6 it would brief them on the audited financial figures. That, however, did not occur since over the previous six months, the company consistently missed filing deadlines for its accounts.
In an interview with ET in May, Raveendran stated that the delay was caused by the firm’s several closed acquisitions, which took time to appear in its financials. He had previously stated that the company hoped to end FY23 with revenues of roughly Rs 17,000 crore. While losses increased to Rs 262 crore in the same period from around a loss of Rs 9 crore in FY19, the edtech firm recorded consolidated operating revenue of Rs 2,381 crore in FY20, an increase of over 82% from the prior year. Aakash Institute, which manages physical coaching institutes, was one of the mid-to large-scale education companies that Byju’s spent more than $2.5 billion acquiring in the previous two years.
